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THE NEW MONARCH OF MOTION 
























































































(&) 3ro*wi 3ros NY 


First Oil Well 

E. L. Drake (right foreground) 










O I L 


THE NEW MONARCH OF MOTION 


AN UNBIASED PRESENTATION OF THE WHOLE 
OIL INDUSTRY. WRITTEN ESPECIALLY FOR 
THE INVESTOR WHO DESIRES THE FACTS 


BY 

REID SAYERS McBETH 

»« 

Author of 

“PIONEERING THE GULF COAST” 




J 0 


NEW YORK 

MARKETS PUBLISHING CORP, 

1919 










Copyright 

MARKETS PUBLISHING CORP. 
1919 






AUG -I 1919 



/ 


jT' 


'38 


\ 



FOREWORD 


Since we asked Mr. McBeth, some two 
months ago, to write “Oil—The New Mon¬ 
arch of Motion,” the whole investing world 
seems, in the words of a famous New York 
newspaper, “to have joined in a mad scram¬ 
ble for fortunes in oil.” 

It was to furnish the intending investor 
rather than the casual reader or student an 
impartial up-to-date book on oil that I pro¬ 
posed this edition. I hope we have suc¬ 
ceeded in producing a book which, while 
comprehensive and accurate, is as free from 
bewildering technicalities as the highly 
intricate subject allows. 

Confirmative of our belief that this book 
would introduce oil at its very beginning of 
greater world-wide usefulness, is the following 
extract from an article on oil by Mr. Edward 
L. Doheny, in Hearst’s Magazine for April, 
1919: 

“ The whole oil industry is only in its forma¬ 
tive stage, the motorization of the world 


FOREWORD 


has scarce begun. Ere long oil-driven ma¬ 
chinery will enable man to conquer the air, 
till the soil, utilize the seas, accelerate com¬ 
munication on a scale not dreamed of to-day. 
We are about to enter the oil age—the age 
of motorization.’’ 

Edmund J. Ryan, 

Secretary-Treasurer , Markets Publishing Corporation. 


vi 


AGKNOWLEDG MENT 


The aim of this book is to touch briefly on 
the essential phases of the petroleum indus¬ 
try in such manner as to give the layman in 
condensed form an idea of its growth, vast 
scope and possibilities. 

More comprehensive and technical infor¬ 
mation is contained in Johnson and Hunt¬ 
ley’s “Oil and Gas Production” and Bacon 
and Hamor’s “The American Petroleum In¬ 
dustry,” both of which have been of great 
benefit to the writer of this volume. 

“The Derrick’s Handbook of Petroleum” 
of the Derrick Publishing Company, Oil City, 
Pa., also has been of great assistance in the 
compiling of material for the chapters on the 
early history of the industry. This and 
other aid is gratefully acknowledged. 








TABLE OF CONTENTS 


PAGE 

I. Petroleum the Fortune Maker . 1 

Outstanding Figures in Industry. Part 
Played by Science, Persistency and Pure 
“ Luck.” 

II. The World’s Dependence on Oil . 16 

Universal use of products—Automo¬ 
biles—Aeroplanes—Ships—Railroads— 
Manufacturing. 

III. Origin and Occurrence ... 29 

Three Theories of Origin—Geological 
Formations Containing Petroleum— 
Comparative Standing of Oil Producing 
Countries. 

IV. History of Oil Development . 44 

In Antiquity—Used by Indians as Medi¬ 
cine—The Drake Well—Pennsylvania— 
West Virginia—Ohio—Indiana—Illi¬ 

nois—Kentucky—Wyoming. 

V. California, Gulf Coast and Mexico 79 
Discovery and Growth of Fields Pro¬ 
ducing Heavy Oils—Lucas’ Spindletop 
Discovery—World’s Greatest “Gusher.” 

VI. Mid-continent Field .... 98 

Discovery of Country’s Greatest Oil 
Territory—Cushing—Riches for Indians 
—North Texas and North Louisiana. 


CONTENTS 


VII. Ranger and North Central Texas 115 
Sensational Developments at Burkbur- 
nett and in Ranger Territory—Riches 
Come Suddenly. 

VIII. Leasing and Drilling . . . 125 

The Scout and Geologist’s Parts— 
Drilling Methods—How a Well is 
Drilled—“ Shooting ”—High Percent¬ 
age of Success. 

IX. Refining of Petroleum . . . 140 

Genesis of Industry—Refining Process 
—“ Cracking ”—Number and Capac¬ 
ity of U. S. Refineries—Gasoline from 
Natural Gas. 

X. Transporting and Marketing . 164 
Pipe Line Mileage, Cost and Rates— 

How a Pipe Line is Laid—Tank Cars— 
Tank Ships. 

XI. Oil — Present and Future . .183 

Rate of Growth of Production—De¬ 
mand Forging Ahead of Production— 
Motors and Gasoline—Ships and Fuel 
Oil—Nation’s Petroleum Reserves— 

Oil Shale Deposits. 

XII. Selecting Oil Securities . . 200 

Rules to Follow in Making Invest¬ 
ments—Reliable Brokerage Service 
Vital. 


I 


PETROLEUM, THE FORTUNE MAKER 

Petroleum is the fuel and lubricant of 
speed and mechanical efficiency—on land, on 
the sea, under the sea, in the air. 

Practically every human activity is de¬ 
pendent upon it in some degree. 

The first oil well in America was drilled in 
1859—only sixty years ago! 

But it is only in the last decade that 
petroleum really has begun to come into 
its own. 

This period has seen the perfection of the 
internal combustion engine, upon which the 
automobile, the aeroplane, the farm tractor, 
motor boats, the submarine, and many other 
efficient mechanical contrivances depend. 

Likewise it has seen the beginning of an era 
of fuel oil for railway and marine transporta¬ 
tion that gives evidence of becoming one of 
the most brilliant phases of the oil industry’s 
golden career. 

Petroleum has built the world’s greatest 
individual fortune—that of John D. Rocke- 
l 


OIL—NEW MONARCH OF MOTION 


feller, who is credited with being the first 
billionaire. 

And there are hundreds upon hundreds of 
others whose fortunes it has made—some¬ 
times overnight. 

It is in the last decade that the Rockefeller 
and other early oil fortunes have made their 
most rapid growth. And there has been a 
vast increase in the last ten years in the 
number of great new fortunes produced by 
oil. 

Petroleum to-day holds the front of the 
stage in a greater degree than ever before. 
As a wealth creator it never has been so fruit¬ 
ful as at present. 

The world’s oil fortunes are largely Amer¬ 
ican fortunes, for the fields of the United 
States supply approximately two-thirds of 
all the petroleum consumed by all the peoples 
of the globe. 

And again the Mid-Continent field, em¬ 
bracing the states of Oklahoma and Kansas, 
Northern Louisiana and Northern Texas, is 
estimated in 1918 to have contributed 
42% of our country’s output. 

The Mid-Continent field including Texas, 
therefore, may be regarded as the greatest 
2 


PETROLEUM, THE FORTUNE MAKER 


present producer of petroleum wealth in the 
United States. 

John D. Rockefeller, entering the oil busi¬ 
ness about 1865 in the old Pennsylvania ter¬ 
ritory, was carried by the industry to the 
position of wealthiest man in the world’s 
history. His fortune and those of his asso¬ 
ciates, however, have experienced their great¬ 
est growth in recent years—the wealth to be 
taken out of the oil industry is becoming 
greater rather than less. 

Rockefeller and those who joined with him 
have been the greatest individual beneficiaries 
because they, early in their careers, realized 
something of the importance of the position 
petroleum was destined to occupy—and they 
pinned their faith to this realization. 

Because of the suddenness with which it 
has made wealth, the history of petroleum 
almost from the very inception of the indus¬ 
try is fraught with the keenest interest. Oil 
companies and individual operators have 
suddenly become immense producers of 
wealth, and land owners under whose per¬ 
haps barren acres petroleum has been found 
have been elevated to opulence. Each new 
oil field has been responsible for new fortunes. 

. 3 


OIL—NEW MONARCH OF MOTION 


Outstanding among the creators of new 
wealth, both in California and Mexico, is 
Edward L. Doheny, who in the early 90’s 
declared he was not worth $40—and who 
as this is written is many times a millionaire, 
with his far-flung financial plans just begin¬ 
ning to bear fruit. 

It was in the Mid-Continent field that 
W. A. McFarlin and five associates built up a 
group of producing properties which they dis¬ 
posed of in 1917 for $35,000,000. It was in 
this field that the vast McBride estate, esti¬ 
mated at some $40,000,000, was built. 

Who has not heard of J. S. Cosden and 
H. F. Sinclair? Their rise to the height of 
millionaires has been accomplished in much 
less than a decade. Both these men are now 
at the head of great independent oil organiza¬ 
tions. 

Then there is John W. Crawford, who made 
his first thousands in the Illinois field and now 
is running it into millions for himself and 
his associates in Oklahoma, Kansas and 
Texas. 

W. A. Springer, a former oil field worker, 
and Dr. S. G. Kennedy, whose homes are 
among the show places in the remarkable 
4 


PETROLEUM, THE FORTUNE MAKER 


city of Tulsa, Oklahoma, sold out their half 
interest in a lease in the Osage district of 
Oklahoma in 1917, for more than $6,000,000! 

Roy M. Johnson, owner of rich producing 
acreage in the Healdton field of Oklahoma, 
formerly was editor of a small weekly news¬ 
paper, at the same time being his own lino¬ 
type operator. 

New fortunes are now being made with a 
rapidity that almost dizzies one by oil men, 
ranchmen and farmers in the Ranger and 
Burkburnett districts of North Central Texas. 
Practically all the original inhabitants of the 
towns of Ranger and Burkburnett have made 
unusual amounts of money since this new field 
was opened. 

And the Ranger field was opened by a coal 
company that had a vision which went be¬ 
yond the mining of coal and the baking of tile 
and brick. 

The foregoing is not intended to convey the 
impression that an uninformed and penniless 
individual could go to the oil fields and find 
wealth leaping abundantly into his out¬ 
stretched arms. 

The individuals here referred to have in 
most cases combined business and scientific 
5 



OIL—NEW MONARCH OF MOTION 


sagacity with persistency. Of course there 
have been cases that hardly could be char¬ 
acterized as other than pure “luck,” but it is 
not well to depend upon that fickle element 
in any business. 

It is related that shortly after J. S. Cosden 
purchased his first small refinery a tornado 
came along and scattered it to the four points 
of the compass. Cosden then laboriously re¬ 
built the little plant—only to have it de¬ 
stroyed by fire before it had entered the profit¬ 
making column. 

But this did not deter this former oil- 
supply salesman. He scraped around and 
obtained money to build again—and now his 
company has one of the largest and most 
modern refineries in the United States, a 
$17,000,000-plant! 

Mr. Springer was an oil-field worker for 
40 years. He toiled in the Pennsylvania, 
West Virginia and Ohio fields before going to 
Oklahoma with one of the first firms that 
turned toward that territory—never, by the 
way, having had an opportunity to attend 
school for a single day. 

Faithful to his employers, he purchased 
many leases, but never took advantage of 
6 


PETROLEUM, THE FORTUNE MAKER 


opportunities to operate clandestinely for his 
own gain. 

Finally he expressed to his employer a de¬ 
sire to purchase acreage at one of the Osage 
Indian lease auctions. The employer agreed 
readily, even providing the use of his own 
geologist to select the acreage. 

Then to help finance the project he enlisted 
the aid of Dr. Kennedy, who had married 
a member of the Osage tribe and is widely 
versed in Osage affairs. 

Dr. Kennedy did the bidding, so that other 
bidders would not suspect that Mr. Springer’s 
employers were seeking the property and con¬ 
sequently place a high valuation on it. The 
4,780 acres were obtained for a bonus of 
$1.10 an acre—$5,280 for a property that 
afterward sold for more than $12,000,000! 

The two men obtained title early in 1913. 
After many rebuffs they were able, in return 
for a one-half interest, to get a prominent 
drilling firm to agree to develop the acreage. 
A few small oil and gas wells were completed. 
Then the sudden drop in oil prices as a result 
of the flood of oil from the famous Cushing 
field halted drilling. 

Finally the drilling firm disposed of its 
7 


OIL—NEW MONARCH OF MOTION 


half-interest—at a price variously estimated 
at from $25,000 to $50,000. This was just 
before the first deep well on the lease “came 
in” with a flow of 75 barrels an hour, or 1,800 
barrels a day. Shortly followed a well flow¬ 
ing 180 barrels hourly and then another that 
produced more than 200 barrels an hour, or 
close to 5,000 barrels a day. 

The Springer family had been living on 
the barren lease far back in the scrub oak- 
covered Osage hills. Affluence suddenly took 
the place of poverty. The lease that oil 
men formerly had discussed with many shak¬ 
ings of their heads became a possession much 
to be desired. Finally, early in 1917 the 
Kennedy-Springer half interest was sold for 
more than $6,000,000. 

And shortly thereafter a company pre¬ 
sided over by one of the members of the 
drilling firm that had sold its half for $25,000 
to $50,000 purchased that self-same half 
share for upward of $6,000,000! 

This is only one story of reward for faith 
and persistency in oil. 

There is in Oklahoma a man who, because 
of the fact that the wells he drilled almost in¬ 
variably proved “dry holes,” acquired the 
8 


PETROLEUM, THE FORTUNE MAKER 


cognomen of “Hard Luck.” But lie was per¬ 
sistent—lie knew he would strike it some day. 
At last the situation came to such a pass that 
there was no more money in sight—and his 
drillers had to be paid. He hardly knew how 
to tell the drillers. 

He procrastinated, deciding to sleep at the 
lease that night. Perhaps he would have 
the temerity to tell the men the next day. 

In the early morning hours he was awak¬ 
ened by joyful shouting. 

The well had “come in”—and it showed a 
flow of several hundred barrels a day. Since 
that time his drilling fortune has been so 
uniformly excellent that the oil men have dis¬ 
carded the old “Hard Luck” and have 
dubbed him “Lucky.” 

This man is now at the head of a growing 
oil company and well on the way to become 
a millionaire. 

The accomplishment of Capt. Anthony 
F. Lucas in completing the great 100,000- 
barrel Spindletop “geyser” near Beaumont, 
Texas, in 1901 is another instance of the re¬ 
ward for persistency—not blind persistency 
but a faith based on scientific deductions. 

This well meant the discovery of the Gulf 
9 


OIL—NEW MONARCH OF MOTION 


Coast district, which extends along the coastal 
plain of Louisiana and Texas. 

Capt. Lucas met rebuff after rebuff in his 
endeavor to obtain financial backing. He 
was compelled to devise new drilling methods 
to combat the heavy back pressure that was 
encountered as depth in drilling was at¬ 
tained. 

Success finally crowned his efforts and a 
field was discovered that has been responsible 
for the organization and growth of some of 
the nation’s most prosperous oil companies. 

Where the “luck” element plays its most 
prominent part is among holders of land under 
which oil is found. The Osage Indians of 
Oklahoma, for instance, now are regarded 
as the wealthiest people per capita of any 
community in the world. Their income in 
1918 in oil royalties and bonuses from tribal 
lands was approximately $4,000 for each 
individual. 

These Indians are among the largest buyers 
of automobiles in the country. It is common 
to see a gaudily blanketed Indian, corpulent 
of figure and inscrutable of countenance, 
driving into an Osage town in the latest model 
of one of the higher priced cars. 

\ 10 

> 


PETROLEUM, THE FORTUNE MAKER 


Individuals of the Creek and other Indian 
nations frequently have incomes from oil 
that would make even a war profiteer 
envious. 

The discovery of oil in the Ranger field of 
North Central Texas came as a Godsend to 
many of the struggling farmers of that sec¬ 
tion. 

A drouth of two years’ duration had pre¬ 
ceded the finding of oil. Crops had been 
burned up and the grass had withered. Water 
was scarce. The cattle had either died or 
were sold at a sacrifice. In numerous in¬ 
stances land owners were compelled to dis¬ 
pose of part of their holdings to provide for 
the payment of taxes on the remainder. 
The Governor of the State raised a large sum 
of money by subscription to aid the stricken 
farmers, many of whom had to abandon their 
scorched farms in order to earn a living. 

Then came oil—and wealth! 

Here is a typical story told in the new 
Texas oil fields. A large well was com¬ 
pleted on a barren farm. The farmer had 
just been offered $500,000 for the land. He 
rushed to his wife to break the glad news. 

“Well, Mary, I got a half million dollars 
11 


OIL—-NEW MONARCH OF MOTION 


now,” he shouted, “and I want to do some¬ 
thing for you.” 

She considered the offer a few moments and 
then replied: 

“I wonder if we could get a new axe. The 
old one has a nick in it!” 

Here is another oil boom tale (which may 
or may not be true—probably not). 

The farmer’s wife had been patient and 
economical through all their tribulations. 
She could not believe that oil might bring 
them wealth, even if their neighbors were 
basking in money. When her husband re¬ 
turned from town one day and told her he 
had received $100,000 for a lease on part of 
the farm, she immediately jumped at the 
conclusion that he had been drinking! 

Finally he took her to the bank and the 
cashier assured her that there was a deposit 
of $100,000 to the credit of her husband. 
They parted at the bank, meeting next at 
home. There she proudly displayed a bottle 
of olives. 

“What are those?” the farmer demanded, 

“They are olives. All the best hotels have 
them. I thought we could now afford them, 
too.” 


12 


PETROLEUM, THE FORTUNE MAKER 


“No, we can’t,” he shouted. “That’s 
extravagance, and we won’t begin now. You 
take ’em right back to the store!” 

It is related that a young farmer near 
Ranger, made wealthy by oil, was wearing an 
expression one day that betokened such dis¬ 
tress that a solicitous neighbor immediately 
jumped to the conclusion that financial dis¬ 
aster had overtaken him. 

The trouble really was that the young man 
was fretting because of the difficulty of ob¬ 
taining labor to pick his cotton. The oil 
boom which had brought him fortune was 
being maligned by him because it was inter¬ 
fering with his cotton picking! 

These are a few cases that smack of the 
romantic and even of the humorous incon¬ 
sistencies that make the oil business so full of 
fascination—and lure. 

The staunch, going-concern, the great or¬ 
ganization end of the business is equally as 
fascinating—because it is from it that con¬ 
crete figures may be obtained regarding the 
immense profits accruing to stockholders in 
well-managed oil producing, refining and 
marketing companies. 

Shares in the great majority of these con- 

13 


OIL—NEW MONARCH OF MOTION 


cerns are purchasable in the established ex¬ 
changes of the country—and anyone may 
buy them who has the enterprise to accumu¬ 
late surplus money. 

The companies of the Standard Oil group, 
for instance, in the seven years following the 
dissolution order in 1911 paid $587,742,787 in 
cash dividends. 

The outstanding capital of the companies 
at the end of the period mentioned aggre¬ 
gated slightly more than $532,000,000. 

At the beginning of the seven years the 
outstanding capital was very much less, the 
stockholders at not infrequent intervals 
receiving valuable stock dividends or rights 
to purchase new stock at a price greatly 
below the market valuation. These extra 
disbursements probably were more valuable 
even than the cash return, which in seven 
years was more than 100% on the capital 
outstanding at the end of the period. 

The Standard Oil companies in the first 
quarter of 1919 paid $26,950,110 in cash 
dividends and approximately $2,494,330 in 
Liberty Bonds. This was at the rate of 
almost $118,000,000 annually, or more than 
20% on the capitalization of the companies! 


PETROLEUM, THE FORTUNE MAKER 


A constant growth in cash disbursements 
has been shown since 1912, when the total 
was $51,786,624. 

Athough because of their number and the 
fact that it would be impossible to assemble 
dividend data on all the independent com¬ 
panies, the record of those possessing capable 
and progressive managements reads the same 
as that of the Standard Oil companies. 

It is a fascinating tale of a brand of pros¬ 
perity that is increasing as the world’s 
dependence on petroleum becomes more and 
more complete. 


15 


II 

THE WORLD’S DEPENDENCE ON 
OIL 

Petroleum and progress are so closely 
wedded in the nation’s history as to be almost 
synonymous. 

Hardly a phase of modern human endeavor 
but what involves in some manner the use 
of a product of petroleum. Not a wheel 
turns which is not dependent on petroleum 
for lubrication. 

Without petroleum the internal combus¬ 
tion engine could not have been developed. 
And it is this type of engine that makes pos¬ 
sible the automobile, aeroplane, motor boat 
and submarine—with their immense appe¬ 
tites for gasoline and lubricating oils. And 
many of the ocean passenger, cargo and war¬ 
ships of the future undoubtedly will use this 
type of engine. In fact, it already is used in 
passenger and cargo vessels of small tonnage. 

Oil-burning ships of great tonnage, includ¬ 
ing super-dreadnaught battleships, of course, 
are numerous. 

16 


THE WORLD’S DEPENDENCE ON OIL 


Petroleum lubricates the wheels of prog¬ 
ress—the machinery that generates the elec¬ 
tricity, and the bearings of the trains that are 
driven by the electricity. 

Germany’s lines of communication broke 
down largely because of a shortage of gasoline 
for motor cars and lubricants for both motor 
cars, artillery and railway equipment. 

The United States and her Allies were able 
to overwhelm their enemies largely because 
the oil producers of the United States saw to 
it that there were adequate supplies of petro¬ 
leum rushed across the sea. The Allies, in 
the words of Lord Curzon of England, 
“floated to victory on a wave of oil.” 

From crude oil there are obtainable more 
than 300 products. The principal ones, of 
course, are naphtha, gasoline, benzine, kero¬ 
sene, gas oil, illuminating oil, lubricating oil, 
fuel oil and various kinds of greases. 

In addition there are paraffin, asphalt 
products, soaps, medicinal oils and a multi¬ 
tude of variations of these products for 
special uses. 

There were estimated at the beginning of 
1919 to be some 5,500,000 or 6,000,000 motor 
vehicles in use in the United States. Nat- 
17 


OIL—NEW MONARCH OF MOTION 


urally this means an immense demand for 
gasoline and lubricants. 

Steamship companies, because of oil’s 
superiority in practically every respect, are 
turning to fuel oil to supply power for 
their vessels. Ton for ton, as compared to 
coal, oil gives greater mileage, occupies less 
space, requires fewer men in the fire room 
(thereby also accomplishing a saving of space 
in the men’s quarters), cuts down time re¬ 
quired for bunkering, gives an even heat, 
and is much more cleanly. 

Numerous railway companies and manu¬ 
facturing concerns also are adopting oil as 
fuel largely for the same reasons. Already 
it appears that fuel oil shortly will be pressing 
gasoline closely as the petroleum product in 
greatest demand. 

The cleaning industry uses millions of gal¬ 
lons of the lighter petroleum distillates an¬ 
nually. In fact, prior to the advent of the 
automobile this was the principal outlet for 
gasoline. The most sought-after petroleum 
product in those days was kerosene, or “coal 
oil.” The situation now has been largely 
reversed; the “coal oil” lamp is almost 
extinct, except in some country districts. 

18 


THE WORLD’S DEPENDENCE ON OIL 


But the oil companies have found a large 
foreign demand for the product. This is 
being developed. The domestic consump¬ 
tion also is being kept up to a substantial 
mark by the oil companies pushing the sale 
of kerosene stoves and other similar devices. 

The manufacture of artificial gas, with 
which practically all the cooking in cities is 
done, involves the use annually of millions of 
gallons of gas oil, a petroleum product. This 
is used for enriching the gas. 

The housewife uses laundry soap that 
probably contains a large percentage of 
material derived from petroleum. In the 
ironing she uses a wax, which is paraffin. A 
coating of paraffin also is poured over the 
cups of jelly. The dressing for the hard¬ 
wood floors and the furniture polish both in 
all probability are petroleum products. And, 
again, the oil for the sewing machine, lawn 
mower, bicycle, etc. 

The modern oil refinery makes almost as 
complete disposition of crude oil as do the 
packing plants in their utilization of the by¬ 
products of the hogs and cattle that they 
slaughter. Nowadays there is little remain¬ 
ing of the crude oil when the refining opera- 
19 


OIL—NEW MONARCH OF MOTION 


tion has been carried out to the limit. The 
amount of residuum in some cases is as low, 
or even lower than 5%. 

High-salaried chemists are employed by 
the large oil companies to evolve means of 
utilizing the by-products to the fullest extent. 
More and more attention is given to the prob¬ 
lem of squeezing the last ounce of gasoline 
out of crude petroleum—because gasoline is 
the most readily marketed of the products. 

A few years ago a great many petroleum 
by-products were wasted by being lumped 
off together as fuel oil. This is not true 
to-day. Markets are being made for the 
various products, or, if no market appears 
available for a petroleum derivative in its 
original form, the company’s chemists are 
set to work to evolve from it a product for 
which it is possible to create a market 
demand. 

Petroleum road oil is an evolution of recent 
years. Automobiles increased the dustiness 
of roads. Likewise they proved the greatest 
single factor in adding impetus to the move¬ 
ment for better highways, increasing the 
demand for road binders and asphalt, both 
of which are obtained from petroleum. 

20 


THE WORLD’S DEPENDENCE ON OIL 

How fortunately the development of the 
motor vehicle worked out in its relation to 
petroleum! Gasoline, of course, is the product 
having the closest relationship to the auto¬ 
mobile. And in refining the requisite amount 
of gasoline, the refiners were compelled to 
produce more of the liquid that came to be 
known as road oil. Automobiles are respon¬ 
sible in a large degree for both—dusty roads 
and the viscous petroleum by-product. 
Happy thought—make them neutralize each 
other! 

So automobiles are responsible in a large 
measure both for the production and con¬ 
sumption of road oil and various asphalt 
road-building materials. 

How large a part is played by road oil 
may be judged by a suburban automobile 
trip in practically any part of the United 
States. Not only have the smaller towns 
acquired the habit of oiling their streets in 
the summer months, but in many instances 
farmers far removed from towns have taken 
it upon themselves individually to oil a 
stretch of highway for a short distance either 
way from their places of abode to prevent 
dust from interfering with their comfort, 
21 


OIL—NEW MONARCH OF MOTION 


cleanliness and crops, and marring the beauty 
of their homes. 

Of special service to the farmer also are 
a variety of disinfectants or “dips” that 
play a large part in the health and well 
being of farm animals. The sale of these 
disinfectants is not confined to the country 
districts either, but the products find numer¬ 
ous uses in cities. Heavy greases find a large 
sale as rust preventatives for farm and fac¬ 
tory tools that are not in constant use. 

Under the general heading of lubricants 
come a variety of petroleum by-products, 
the limit to which depends both on the de¬ 
mand and the ingenuity and efficiency of the 
refiner and his scientific staff. A catalogue 
of one of the great refining companies lists 
something like thirty different oils and greases 
—and still it has not covered the whole list. 

The lubrication list extends from heavy 
axle greases to a light oil that insures the 
smoothness of action of milady’s tiny wrist 
watch, and spindle oils adapted to the lubri¬ 
cation of the swiftly revolving spindles in a 
cotton mill. 

To develop to the most profitable extent 
the market for these various lubricants re- 
22 


THE WORLD’S DEPENDENCE ON OIL 

quires distinctive advertising and sales meth¬ 
ods. Oil for gas engines, for instance, is ad¬ 
vertised by the refiner or distributor in 
mechanical and engineering publications. 
Sales of axle grease, threshing machine oil, 
harness oil, animal “dips” and various other 
products are sought through the medium of 
farm publications. 

From petroleum that has a paraffin base 
naturally comes a considerable quantity of 
that substance. It goes on the market as 
refined paraffin and is sold in large quan¬ 
tities, especially in the fruit canning and 
jelly making season. 

It provides a sanitary and air-tight cover¬ 
ing for preserves. It goes into the making of 
candles for every conceivable use and occa¬ 
sion. It is the principal ingredient in cheese 
coating, a substance which is declared to pre¬ 
vent cheeses from becoming contaminated 
by dirt or insects. The housewife’s ironing 
wax, put up so neatly with a covering of 
heavy fabric and a convenient wooden han¬ 
dle, is another agency for utilizing this 
petroleum by-product. 

Even crayons used for marking in various 
colors come—from an oil well! 

23 


OIL—NEW MONARCH OF MOTION 


To indicate to what a fine point the oil 
industry has been developed; to show how 
far removed it may become from just “coal 
oil” and gasoline, note the following, which 
appears in an oil company’s specialty cata¬ 
logue, accompanied by a colored illustration 
of the article concerned: 

“Jewish Tumbler Candles—These are used 
almost exclusively for burning by the Jewish 
trade in memoriam for departed relatives and 
for use during Yom Kippur and other Jew¬ 
ish holidays. Glasses bear an appropriate 
label printed in Yiddish, explaining the pur¬ 
pose for which they are used. Glass will be 
equipped with regular tin cover, so that 
it can be used for preserving jelly, and for 
other purposes after having been burned. 
Label also states that the glasses are ‘Kosher,’ 
which means clean. Tumbler lights contain 
no matter which can be offensive to the Jew¬ 
ish religion, such as tallow or pork pro¬ 
ducts.” 

In order to increase the sales of floor oil 
and floor dressing some oil companies also 
distribute floor oilers and mops. Other com¬ 
panies manufacture and sell kerosene lamps 
and cooking and heating stoves in order to 
24 


THE WORLD’S DEPENDENCE ON OIL 


make more convenient the adaptation of 
kerosene to these uses. 

One of the great oil companies, when the 
production of gasoline rose to such a point 
that the kerosene that accompanied the man¬ 
ufacture of the motor fuel threatened to flood 
the market, sought an outlet in China and 
India. But the lamps in use in those coun¬ 
tries were crude, smoky affairs that con¬ 
tinued to be smoky even when kerosene was 
used. So, said the natives, why buy kero¬ 
sene? 

Then the oil company hit upon the plan 
of selling lamps also. The lamps cost 11 
cents each, and were sold for 7 \ cents—but 
they brought the desired demand for kero¬ 
sene! 

China’s working day was lengthened by 
the introduction of kerosene lighting. One 
result is a greater production of silk for us, 
and greater prosperity for the Chinese. 
Thus does petroleum. play its part in the 
economic destinies of the world’s nations. 

This gives some idea of the ingenuity exer¬ 
cised in bringing about the use of petroleum. 
But it is the gasoline and fuel oil demand 
that really is the backbone of the industry. 

25 


OIL—NEW MONARCH OF MOTION 

The 5,500,000 or 6,000,000 motor vehicles 
—and more to come—must have gasoline* 
The great Merchant Marine that the United 
States is building up is depending upon petro¬ 
leum fuel. How great this demand will 
prove may be judged from the fact that the 
Shipping Board in March, 1919,— with the 
ship-building program only fairly well started 
—asked bids for the supplying of some 
34,000,000 barrels of fuel oil to take care of 
the board’s requirements for the ensuing 
year. 

Chairman Edward N. Hurley of the Ship¬ 
ping Board estimated late in 1918 that the 
proposed 25,000,000-ton American Merchant 
Marine to be operated with oil fuel, as is 
planned, would consume 150,000,000 barrels 
yearly if the oil fuel were burned under the 
ships’ boilers. Half this amount would be 
used, he estimated, if the ships were driven 
by internal combustion engines of the Diesel 
type. 

Further, Mr. Hurley sees a world ocean 
tonnage by 1924 of 75,000,000. Operated 
even with the Diesel type of engine these ves¬ 
sels, he estimated, would consume 200,000,- 
000 to 250,000,000 barrels of crude oil an- 
26 


THE WORLD’S DEPENDENCE ON OIL 


nually. This is approximately one-half of 
the world’s present production. 

It isn’t likely that all the vessels will use 
oil—there still are sailing ships in these days 
of steam and motors. But oil is recognized 
as a more efficient—and, therefore, more 
economical—marine fuel than coal and the 
coming struggle for world trade supremacy is 
bound to mean a gigantic demand for fuel 
oil. 

British interests, with this struggle in view, 
were reported early in 1919 to be converting 
a large majority of their merchant ships into 
oil burners. This report caused Chairman 
Hurley to say: 

“Just wait until we really get into the 
business of consuming oil as a substitute for 
coal. Then a billion gallons or so will look 
like a small quantity. We will keep thou¬ 
sands of wells doing nothing but supplying 
our merchant fleet with liquid fuel. We 
have scores of ships which use oil exclu¬ 
sively, and we expect to convert many of the 
older vessels into oil burners.” 

This fuel oil era is just dawning—but the 
gasoline era is here—it is a gigantic actuality. 
The motor-driven vehicles at present are 

27 


OIL—NEW MONARCH OF MOTION 


estimated to be consuming gasoline at the 
rate of approximately 50,000,000 barrels of 
42 gallons each annually. The passenger 
car industry is conceded to be far from its 
crest, while the motor truck and tractor 
production is just beginning to accelerate for 
its upward climb. 

More and more is the world depending upon 
petroleum as its great agency of progress— 
and the United States is the leader both as a 
consumer and producer. 

The average estimated consumption of 
petroleum for each individual in the United 
States in 1918 was from three to three and 
one-half barrels. Perhaps, with your motor 
car or your excessive use of cooking gas you 
used more than your family's quota. Or, 
perhaps, you paid for a part of your three or 
three and one-half barrels through railway or 
traction fares. Anyway, be you man, woman 
or child, that amount must be credited to you. 


28 


ORIGIN AND OCCURRENCE 


Various theories have been advanced 
since the discovery of natural gas and petro¬ 
leum in explanation of their existence in the 
earth’s crust. There are three distinct the¬ 
ories of origin. 

One is the cosmic theory, which holds to 
the belief that petroleum is a part of original 
earth substance. Another is that the origin 
is inorganic, or that it was formed by the 
chemical combination of various substances 
coming in contact with each other in the 
earth’s crust. The third, or most widely held 
belief, is that petroleum and natural gas orig¬ 
inally were organic, or animal and vegetable 
matter. 

The cosmic theory is based on the occur¬ 
rence of small amounts of hydrocarbons in 
meteorites. This supports the idea that these 
substances were a part of the original mate¬ 
rial that entered into the formation of the 
earth. Scientists accept it to a limited ex¬ 
tent, but assert that it could not be respon- 


OIL—NEW MONARCH OF MOTION 


sible for the great deposits of oil and gas in 
various parts of the world. 

Neither is the theory of inorganic origin 
now accepted generally. Chemists of the 
past held to it, but actual geological evidence 
is said to be opposed to it overwhelmingly. 

One of the common assumptions made in 
support of this hypothesis is that large 
amounts of metallic carbides at great depths 
react with descending waters and form vari¬ 
ous gaseous hydrocarbons, which, by heat and 
pressure and filtration, finally are changed 
into petroleum and natural gas. The exist¬ 
ence of such a circulation on the interior of 
the earth, however, is questioned. 

The theory generally accepted is that 
petroleum had its origin in organic materials, 
plant and animal life—principally the former. 
While some scientists believe that the original 
material forming both coal and petroleum 
may have been the same, they agree that 
conditions under which the two products 
were formed were not the same. The rela¬ 
tion of the original deposit of organic matter 
to surrounding strata and other conditions, 
they believe, determined whether the result 
would be petroleum or coal. 

so 


ORIGIN AND OCCURRENCE 

It formerly was the opinion of those who 
believed in the organic theory that petro¬ 
leum was a product of the natural distillation 
of coal or carbonaceous matters. Volcanic 
intrusions are said in a few cases to appear 
to have converted coal or other similar 
substances into oil, but the belief now 
is held by many persons that terrestrial 
(or land) vegetation does not, as a rule, give 
rise to petroleum. They ascribe the source 
of petroleum to the decomposition both of 
marine-animal and vegetable life. Terres¬ 
trial vegetation on the other hand is acknowl¬ 
edged to be responsible for coal. 

It is well to explain that scientists are not 
unanimous in the belief that marine organisms 
are responsible for petroleum. Many of 
them do not confine the organic material to 
the marine classification. 

Laboratory experiments and facts observed 
in nature tend to confirm the general belief 
that petroleum has been derived from the 
decomposition of animal or vegetable bodies 
or both. For example, when the body of an 
animal or plant is distilled in a closed retort, 
or undergoes decay in the absence of air, 
certain gaseous and liquid products are de- 
31 


OIL—NEW MONARCH OF MOTION 


rived. Again, oily water frequently exudes 
from peat mosses; and marsh gas, the chief 
constituent of natural gas, bubbles up from 
every stagnant pool. 

There is, therefore, no need of far-fetched 
chemical theories to explain what is more or 
less a matter of common experience. The 
difference of opinion among geologists is as 
to the manner in which the decomposition 
has been brought about. 

One view is that the great beds of bitu¬ 
minous shales have been the chief sources of 
petroleum—that the animal and plant re¬ 
mains in those beds have undergone a kind of 
a distillation or secondary decomposition, 
resulting in petroleum, which by hydro¬ 
static pressure (or the movement of fluids 
seeking equilibrium beneath the earth’s sur¬ 
face) has been carried to the rock strata in 
which it is now found. 

Oil shale beds are sedimentary in their 
origin, being composed of particles of clay 
(and the inorganic materials) which have been 
carried long distances and re-deposited in 
water. It is well known that clay has a 
particular affinity for oily matter. Oily sub¬ 
stances floating in muddy water have been 
32 


ORIGIN AND OCCURRENCE 


found to attach themselves to suspended par¬ 
ticles of clay and sink to the bottom to pro¬ 
duce there a stratum rich in oil, which in 
time would be compressed by the newer 
overlying strata in the shale. 

Much of the petroleum of the shale doubt¬ 
less was derived from organic matter under¬ 
going decomposition in other and remote 
strata. This theory is based largely on the 
Pennsylvania field, and seems more surely 
than any other to explain the origin of the 
petroleum found there. 

The Pennsylvania oil occurs in a series of 
sandstone strata which contain few, if any, 
organic remains and could not, therefore, 
have been the original source of the oil. 
These sandstone strata, however, lie in close 
relation to the bituminous and other shales 
and, from their porous nature, have served 
as reservoirs in which the oil, oozing from the 
shale, has passed and accumulated in large 
quantities. 

The second theory accounts for oil in lime¬ 
stone rock. Believers in this theory assert 
that petroleum has been formed from the 
remains of animals or plants in the same rock 
strata now yielding the oil, the decomposition 

33 


OIL—NEW MONARCH OF MOTION 


having taken place under such conditions 
that the organism passed directly into petro¬ 
leum, which since has remained in the rocks 
where it was formed. 

In substantiation of this theory, it is stated 
that, in some cases, petroleum is found filling 
the cavities of large fossil shells in the Tren¬ 
ton limestone of Ohio. From some speci¬ 
mens it is stated that nearly a pint of petro¬ 
leum has been obtained. 

It now is commonly believed by scientists 
that the oil found in limestone has been 
produced in the rock by direct decomposition 
of organisms originally inhabiting the water 
in which the rock was deposited. Moreover, 
it is believed that for the most part these 
organisms were animals, since the limestone 
oil possesses more sulphur and nitrogen, it 
is of a darker color, of higher specific gravity 
and has a more rank and disagreeable odor 
than the shale oil produced in Pennsylvania 
which probably owes its origin to the decom¬ 
position of plants in the manner set forth in 
the previously mentioned theory. 

There also is a difference of opinion as to 
the conditions under which the organisms 
have been changed into oil, some holding 

34 


ORIGIN AND OCCURRENCE 

that the process has taken place at a high 
temperature and under great pressure. 

Others hold to the view that petroleum, 
like coal, has been formed at moderate tem¬ 
peratures, and under pressure varying ac¬ 
cording to the depth of the rock formation. 
This view is said to be supported by the fact 
that petroleum is found on the Swedish coast 
as a product of the decomposition of seaweed, 
heated only by the sun and under ordinary 
or atmospheric pressure. 

Although there is no direct basis of fact 
for conclusions regarding conditions of tem¬ 
perature and pressure under which petroleum 
and natural gas were formed, science gener¬ 
ally concedes that destructive distillation, 
carried on through thousands of years, of the 
remains of the plants and animals which 
either grew or were deposited in the water 
that permeated the shale beds as the various 
strata were laid down, is responsible for these 
great stores of liquid wealth. 

Petroleum has been found at depths vary¬ 
ing from 80 or 100 feet below the earth’s 
surface to depths of more than 4,000 feet. 
In fact, the tendency is continuously toward 
deeper and deeper drilling. This deep drill- 

35 


OIL—NEW MONARCH OF MOTION 


ing not only has resulted in new productive 
sands being disclosed underlying old fields, 
but also the discovery of entirely new pro¬ 
ducing districts. 

Petroleum and natural gas usually are 
found in close proximity. The oil driller 
takes the presence of gas as a favorable, but 
not infallible indication. 

In the eastern central section of Indiana a 
gas field was opened many years ago. Finally 
the gas supply began to fail and, in an en¬ 
deavor to replenish it, deeper drilling was 
resorted to. The result is that the terri¬ 
tory became a rich oil field. 

The deposits of petroleum thus far ex¬ 
ploited commercially have been confined 
to rock formations younger tha the Cam¬ 
brian and older than the Quaternary, which 
are perhaps millions of years old. Indica¬ 
tions, however, have been found in rocks of 
practically every geological period. 

Conditions favorable for the presence of 
oil or gas are a porous stratum and an im¬ 
pervious cover, thus making possible the 
formation of a subterranean reservoir. It is 
found in sands or coarse sandstone, as well as 
in cavities of limestone. The impervious 

36 


S/NCLINE 



Typical Oil Bearing Formation 
Showing well drilled into oil deposit on slope of 
anticline 

























ORIGIN AND OCCURRENCE 

overlying stratum is necessary to protect the 
oil from water and air. 

There also are structural conditions neces¬ 
sary to the presence of oil and gas. The 
largest deposits have been found in strata 
unbroken and comparatively undisturbed 
through the ages. The presence of anti¬ 
clines, which are upward folds or raises in the 
strata of the earth’s surface, exert a powerful 
influence. 

These anticlines may be sharply defined 
and limited in area, or may have a grad¬ 
ually upward rise and extend over a great 
area. They frequently are in series, and 
sometimes are crossed by subsidiary anti¬ 
clines; all of which play an important part in 
the accumulation of oil. The dip of the 
anticline may be very gradual—sometimes 
only a few feet to the mile. 

It is in identifying these anticlines and ob¬ 
serving other indications that the work of a 
geologist plays such an important part in 
the oil fields. 

The downward fold or trough (the opposite 
of the anticline) is called a syncline—and, of 
course, is not favorable to the accumulation 
of petroleum. 


37 


OIL—NEW MONARCH OF MOTION 


A visitor to the Duke pool in the Ranger 
territory tells of three wells drilled in a row 
200 feet apart in the heart of the pool. The 
two end wells were prolific producers of oil 
and were giving forth very little gas, while 
the well in the middle was “gassing” copi¬ 
ously and producing oil in very small quan¬ 
tity. The explanation was that the middle 
well had been drilled at the very crest of the 
anticlinal wave. 

In the sand at the highest elevation in the 
anticline is found gas, which, because of its 
lightness, rises above the oil. Next in order 
down the slope of the anticline is found the 
petroleum. Water, being heavier than the 
oil, is found toward the base of the anticline 
and in the trough of the syncline. The drill¬ 
ing for oil, therefore, is along the slope of the 
anticline. It requires drilling, however, to 
determine whether the structure is produc¬ 
tive or barren of oil. 

The anticlines in the Gulf Coast field are 
of a sharp pitch and are called domes. Some 
of these domes are very limited in extent and 
the oil is found in some cases closely asso¬ 
ciated with sulphur and rock salt deposits; 
hence the term “salt dome.” The produc- 
38 


ORIGIN AND OCCURRENCE 

tive area at Spindletop was found to embrace 
only about 300 acres. 

So sharp is the structural incline in this 
territory that unproductive wells not infre¬ 
quently are completed a very short distance 
from highly productive wells. Because of 
this fact, operations in this field are regarded 
as more hazardous than in the average oil 
territory. 

But, as if to make amends for this situa¬ 
tion, some of the greatest “gushers” in the 
history of American oil development have 
been struck in the Gulf Coast district. The 
Lucas well had an initial flow of close to 
100,000 barrels a day. Many other wells 
have produced from 10,000 to 50,000 barrels 
daily. The Gulf Coast oil is of an asphalt 
base not high in gasoline content, but admi¬ 
rably adapted to fuel oil production. 

The geographical distribution of petroleum 
is not limited to any part of the world, 
although the prolific fields thus far discov¬ 
ered are for the most part north of the 
equator. The relative importance of the 
various countries as oil producers is most 
graphically indicated by figures compiled by 
the United States Geological Survey. 

39 


OIL—-NEW MONARCH OF MOTION 


This tabulation shows that of the world’s 
total in 1917 of 500,651,086 barrels, there 
were produced and marketed from the fields 
of the United States 335,315,601 barrels, or 
almost 67%. Russia stood in second place, 
with 69,000,000 barrels, or slightly less than 
14%. Mexico was third, with 55,292,770 
barrels, or 11%. It is generally conceded, 
however, that Mexico went into second place 
in 1918. The 1917 output of the United 
States and Mexico amounted to 78%, or 
almost four-fifths of the world’s total. 

The standing of other countries as petro¬ 
leum producers in 1917 follows: Dutch East 
Indies, 12,928,955 barrels, or 2.58%; India, 
8,500,000 barrels, or 1.70%; Galicia, 5,965,- 
447 barrels, or 1.19%. Japan and Formosa, 
2,898,654 barrels, or .58%; Rumania, 2,681,- 
870 barrels, or .54%; Peru, 2,533,417 bar¬ 
rels, or .51%; Trinidad, 1,599,455 barrels, or 
.32%; Argentina, 1,144,737, or .23%; Egypt, 
1,008,750, or .20%; Germany, 995,764 bar¬ 
rels, or .20%; Canada, 205,332 barrels, or 
.04%. Italy is credited with 50,334 barrels 
and all other countries, including Cuba with 
16,167 barrels, with a total of 530,000 bar¬ 
rels. The percentage for Italy and the other 
40 


ORIGIN AND OCCURRENCE 


countries was .11. The figure for the Dutch 
East Indies includes British Borneo. 

A small amount of oil is being produced in 
Cuba. Santo Domingo is said to show 
promise. Development work has been going 
on in Persia. Mespotamia is said to give in¬ 
dications of developing an oil field. Ex¬ 
ploratory drilling is being conducted in Eng¬ 
land. Wells have been completed in Colom¬ 
bia, South America, but marketing facilities 
have not yet been provided. Venezuela has 
been found to be productive of oil, the output 
of some of its wells being refined at a plant 
on the neighboring island of Curacao. 

Wells are being drilled in Costa Rica and 
Panama in the hope of finding supplies of 
fuel oil convenient to the Panama Canal. 
Oil companies also have been granted con¬ 
cessions in the republics of Guatemala and 
Honduras. Ecuador and Bolivia are said 
to contain oil indications, which also have 
been noted along the eastern slope of the 
Andes in the Amazon basin. 

Mexico, with its immense “gusher” wells 
has a potential production very greatly in ex¬ 
cess of the 63,000,000 barrels credited to it in 
1918. At present it is regarded as the world’s 
41 


OIL—NEW MONARCH OF MOTION 


greatest future source of heavy oils suitable for 
fuel purposes. Latin America apparently is 
destined to be the scene of intensive explora¬ 
tion and development in the next* decade. 

In the United States some fifteen states in 
widely scattered sections have entered def¬ 
initely the ranks of oil producers. They are 
Oklahoma, Kansas, Texas, Louisiana, Cal¬ 
ifornia, Wyoming, Montana, Colorado, New 
York, Pennsylvania, West Virginia, Kentucky, 
Ohio, Indiana and Illinois. Of .these states N e w 
York, Montana and Colorado do not produce 
large quantities of oil. Small wells have been 
drilled in Alaska, Michigan and Tennessee. 

Test wells are being put down continuously 
in other states and new sections of states 
already in the producing column. Undoubt¬ 
edly this work will result, as in the past, in 
extending largely the producing areas. 

These states are grouped for convenience 
into fields. The Appalachian field, for in¬ 
stance, includes Pennsylvania, West Vir¬ 
ginia, Kentucky and adjacent producing ter¬ 
ritory in New York and Ohio. The Mid- 
Continent field includes Oklahoma, Kansas, 
Northern Texas and Northern Louisiana. 
The Gulf Coast field includes the territory 

42 


ORIGIN AND OCCURRENCE 


in the coastal plain of Louisiana and Texas. 
The Lima-Indiana field embraces north¬ 
western Ohio and Northeastern Indiana. 
The Illinois field includes the producing sec¬ 
tion of that state and adjacent territory in 
Western Indiana. California constitutes a 
field in itself. The Rocky Mountain field 
includes Wyoming, Montana and Colorado. 

The following table shows the field classi¬ 
fication used by the United States Geological 
Survey and production figures indicating the 
relative importance of the territories in 1917 
and 1918: 


MARKETED OUTPUT OF THE FIELDS OF THE 
UNITED STATES IN 1917 AND 1918 IN BAR¬ 
RELS OF 42 GALLONS EACH. 


Field. 

1917 

1918 

Appalachian. 

24,932,205 

25,300,000 

Lima—Indiana. 

3,670,293 

3,100,000 

Illinois. 

15,776,860 

13,300,000 

Oklahoma—Kansas. 

155,043,596 

139,600,000 

Central and North Texas.. . 

10,900,646 

15,600,000 

North Louisiana. 

8,561,963 

13.000,000 

Gulf Coast. 

26,087,587 

21,700,000 

Rocky Mountain. 

9,199,310 

12,600,000 

California. 

93,877,549 

101,300,000 

Alaska and Michigan. 

10,300 



335,315,601 

345,500,000 


43 


















IV 


HISTORY OF OIL DEVELOPMENT 

Four and one-half billion barrels of petro¬ 
leum! That is the record of the United 
States from the inception of the industry in 
1857 up to the end of 1918. 

The world’s production of the 61 years 
ending with 1917 was 6,983,567,246 barrels, 
of which the United States produced 4,252,- 
644,003 barrels of 42 gallons each, or almost 
61%. 

The country’s marketed production in 1918 
is estimated at 345,500,000 barrels. This 
means that of the United States total for 
62 years (1857 to 1918, inclusive) 8% was 
produced in 1918. All of which gives an 
insight into the present gigantic proportions 
of the industry. 

That the history of petroleum in the United 
States means world petroleum history is 
proved by the fact that the United States in 
1917 gave forth 67% of the world’s total, 
the nearest competitor, Russia, contributed 

44 


HISTORY OF OIL DEVELOPMENT 


slightly less than 14%. Next came Mexico, 
with 11%. No other country approached 
any of these percentages, the Dutch East 
Indies being fourth with 2J%. 

Most of Mexico’s output is produced by 
American companies and is sent to the United 
States to be refined and marketed. The 
United States and Mexico, which, therefore, 
may be considered practically as a unit, were 
responsible for 78% of the world’s supply of 
petroleum. It is essentially an American 
industry. 

Although the real history of petroleum 
began to be written only a little more than a 
half-century ago, “rock oil” was gathered 
for various ritual uses in remote ages, and 
later for medicinal purposes. The word itself 
is derived from the Latin words,—“petra,” 
meaning rock, and “oleum,” meaning oil— 
rock oil. 

Herodotus described in his writings oil 
pits near ancient Babylon and pitch springs 
near Zante. Mention also is made by early 
historians of oil obtained near Agrigentum 
in Sicily and used for illuminating purposes. 
Ancient records of China and Japan contain 
allusions to the use of natural gas, while pe- 
45 


OIL—NEW MONARCH OF MOTION 


tro eum or “burning water,” was known in 
Japan in the seventh century. 

The gas springs of North Italy led to the 
adoption in 1226 by the municipality of 
Salso-maggiore of a salamander surrounded 
by flames as its emblem. Marco Polo in the 
thirteenth century referred to the oil springs 
of Baku. 

Probably the earliest mention of petroleum 
in the western hemisphere occurs in Sir 
Walter Raleigh’s references in 1595 to the 
pitch lakes of Trinidad. Thirty-seven years 
later Joseph de la Rochelle d’Allion referred 
to the oil springs of New York as published 
in Sagard’s “l’Histoire du Canada.” 

A Russian traveler, Peter Salm, in a book 
on America published in 1748 showed a map 
of the oil springs of Pennsylvania and about 
the same time Racievitch referred to the 
deposits of liquid bitumen in Rumania. 

/ Although the Drake well, which was com¬ 
pleted in the Oil Creek district of Pennsyl¬ 
vania in August, 1859, was not the first in 
America actually to produce oil, it is gener¬ 
ally conceded to have been the first well 
drilled with the deliberate intention of ob- ^ 
taining oil. 


46 


HISTORY OF OIL DEVELOPMENT 

Wells drilled prior to this pioneer of 
pioneers were for the purpose of producing 
salt water, and the presence of petroleum was 
looked upon as little less than a calamity—it 
complicated almost to the point of hopeless¬ 
ness the process of manufacturing salt! 
To-day salt water is the bugaboo of the oil 
man. 

Long before the first white settler pene¬ 
trated the territory, the presence of oil in 
certain parts of Pennsylvania and New York 
was known to the Indians and they made 
use of it for medical purposes. It was known 
to the first white men who learned of its 
existence as Seneca oil—it having been the 
Seneca Indians whom they found making use 
of the product. 

It even is believed that use of this mineral 
oil by the American aborigines extended over 
several centuries before the white men came. 
There were noticeable in the early days of 
Pennsylvania’s oil development many oblong 
pits in the oil seepage sections of Venango and 
Warren counties. It is possible that some 
traces of these old pits still exist. They were 
dug in the low ground near streams and un¬ 
doubtedly were constructed with a view to 
47 


OIL—NEW MONARCH OF MOTION 


collecting petroleum. In some cases they 
were thickly scattered over areas several 
hundred acres in extent. 

Some idea as to their antiquity may be 
gained from the assertion that a tree growing 
in the bottom of one of these pits was felled 
in 1815, and it showed rings of growth indi¬ 
cating that it was eighty years old. 

The Rev. S. J. M. Eaton’s “History of the 
Oil Regions,” published in 1865, tells of hun¬ 
dreds of trees showing a diameter of one and 
one-half feet growing in the petroleum pits, 
‘indicating an antiquity antedating the 
earliest records of civilized life in this region.” 

At least two American oil springs are men¬ 
tioned in writings of explorers a century and 
a half ago. Mention also was made of oil 
floating on the surface of Oil Creek. 

“In the northern part of Pennsylvania,” 
says a letter written by Gen. Benjamin Lin¬ 
coln in 1773, “there is a creek called Oil 
Creek, which empties itself into the Alle¬ 
gheny River, issuing from a spring on the top 
of which floats an oil, similar to what is 
called Barbadoes tar, and from which may be 
collected by one man several gallons in a day. 

“The troops in marching that way halted 
48 


HISTORY OF OIL DEVELOPMENT 


at the spring, collected the oil and bathed 
their joints with it. This gave them great 
relief, and freed them immediately from 
rheumatic complaints with which many of 
them were affected. The troops drank freely 
of the waters—they operate as a gentle 
purge.” 

“I have seen three kinds of oil springs— 
such as have an outlet, such as have none, 
and such as rise from the bottom of the 
creek,” wrote David Leisberger, a Moravian 
missionary, in a report on his visit to the 
Allegheny regions in 1767. “From the first, 
water and oil flow out together, the oil im¬ 
pregnating the grass and soil; in the second 
it gathers on the surface of the water to the 
depth of the thickness of a finger; from the 
third it rises to the surface and flows with the 
current of the creek. 

“The Indians prefer wells without an 
outlet. From such they first dip the oil 
that has accumulated; then stir the well, 
and when the water has settled, fill their 
kettles with fresh oil, which they purify by 
boiling. It is used medicinally, as an oint¬ 
ment for toothache, headache, swellings, 
rheumatism and sprains. Sometimes it is 
49 


OIL—NEW MONARCH OF MOTION 


taken internally. It is of a brown color and 
can also be used in lamps. It burns well.” 

“The virtues of Seneca oil are similar to 
those of British oil and supposed to be equally 
valuable in the cure of rheumatic and other 
pains,” wrote F. Cuming after a tour of the 
territory in the summer of 1807, “large quan¬ 
tities being collected in Oil Creek, a branch of 
the Allegheny River, and sold at from one 
dollar and a half to two dollars per gallon. 

“The mode of collecting it is this: The 
place where it is found bubbling up in the 
creek is surrounded by a wall or dam to a 
narrow compass. A man then takes a 
blanket, flannel or other woolen cloth, to 
which the oil adheres, and spreading it over 
the surface of the enclosed pond, presses it 
down a little, then draws it up, squeezes out 
the oil into a vessel prepared for the purpose; 
thus twenty or thirty gallons of pure oil can 
be obtained in two or three days by one man.” 

The foregoing is enlightening in contrast 
with the present, both as to petroleum prices 
and as to production methods. On a basis 
of the prices mentioned, a 42-gallon barrel of 
oil was marketable at from $63 to $84—pro¬ 
viding anyone could have been found who 
50 


HISTORY OF OIL DEVELOPMENT 


would have been willing to purchase such 
an unheard-of quantity. The use of oil at 
that time, it must be remembered, was con¬ 
fined to the range already mentioned. 

A single producing well the size of those 
that are common to-day would have wrought 
panic a century ago. Not only would it 
have defied efforts to care for it as it emerged 
from the earth, but, had it been possible to 
save it, the oil as to marketability would have 
proved a white elephant to the producer. 

The entire early history of the oil industry 
was fraught with a never-ceasing struggle to 
find new uses for petroleum and thereby keep 
the demand somewhere near the possibilities 
of production. Occasionally, it is true, high 
market levels were reached in the years im¬ 
mediately following the drilling of the Drake 
well, but these usually were the result of 
manipulation. 

The woolen blanket method of collecting 
oil prevailed, it appears, for many years. 
The following extract from the writings of the 
Rev. Mr. Eaton describes the production 
method practiced probably between 1810 
and 1815: 

“A point was selected where the oil ap- 

51 


OIL—NEW MONARCH OF MOTION 


peared to bubble up most freely, when a pit 
was excavated to a depth of two or three feet. 
Sometimes this pit was rudely walled up, 
sometimes not. Sometimes it was near the 
edge of the water on the bank of the stream, 
sometimes in the bed of the stream itself, 
advantage being taken of a time of low water. 

“In these pits the oil and water would 
collect together, until a stratum of the 
former would form upon the surface of the 
latter, when a coarse blanket or piece of 
flannel was thrown in. This blanket soon 
became saturated with oil, but rejected the 
water. The blanket was then taken out, 
wrung into a tub or barrel and the opera¬ 
tion repeated.” 

“The first shipment of petroleum was to 
Pittsburgh,” wrote the same authority con¬ 
cerning the early marketing of Pennsylvania 
oil, “and was in this wise: Mr. Cary, one of 
the first settlers on Oil Creek, possessing per¬ 
haps a little more enterprise than his neigh¬ 
bors, would collect or purchase a cargo of 
oil and proceed to Pittsburg and exchange it 
for commodities needed in his family. This 
cargo consisted of two five-gallon kegs, that 
were slung one on each side of a horse, and 
52 


HISTORY OF OIL DEVELOPMENT 

thus conveyed by land a distance of seventy 
or eighty miles. 

“Sometimes the market in Pittsburg be¬ 
came very dull, for a flatboatman would 
occasionally introduce a barrel or two at 
once that he had brought down on his raft 
of lumber or logs. At other times the de¬ 
mand fell off so that the purchase of a barrel 
was hazardous. 

“At a period somewhat later than this, 
General Samuel Hays, who settled here in 
1803, related that at one time he purchased 
all the oil produced in the country, and that 
the highest annual yield was sixteen barrels. 
This oil he sold at the time in Pittsburgh at 
about $1 per gallon.” 

It appears that it was not until the second 
quarter of the last century, however, that 
activity began to manifest itself in the direc¬ 
tion of developing a broader field of useful¬ 
ness for petroleum. The following letter 
appeared in the Pittsburgh Gazette in 1828: 

“I see that the corporation has at last de¬ 
termined to light the city. It is a very sen¬ 
sible determination; for, indeed, few places 
need it more. I fear that lighting with gas 
will be found troublesome and expensive, in 

53 


OIL—NEW MONARCH OF MOTION 


spite of the vast supply and cheapness of 
coal; but I will tell you what is the cheapest, 
best and most economical light you can use; 
it is what is called the West Seneca oil, which 
is petroleum. 

“This substance, were there a ready mar¬ 
ket for it, might be supplied at your very 
doors to an almost unlimited extent. At 
present it is almost useless, being used only 
as an ingredient in what is called ‘British 
Oil,* and as a horse medicine (in which, by 
the way, it is very useful). The price of it is 
very low, because a few barrels glut the de¬ 
mands of the apothecaries; but if the city 
would take a large supply, or if it were 
brought into use otherwise, I think it could 
be supplied at 25 cents per gallon. The salt 
well may be cleared of what floats by letting 
a blanket down every quarter of an hour, 
and this will also apply to the springs where 
it is discovered. 

“Let anyone who doubts that it is a per¬ 
fectly good oil for lamps send to the apoth¬ 
ecary’s for half a pint, and burn it one night 
in a lamp of any kind, precisely as fish or 
spermaceti oils are burned, observing only 
that to avoid smoke, it is necessary that the 

54 


HISTORY OF OIL DEVELOPMENT 


length of the wick should be diminished. I 
have tried it, and found it to succeed per¬ 
fectly, and there is no reason why it should 
not be clarified as well as any other oil (and 
then it will burn as free from smoke) by fil¬ 
tering or precipitating the gross particles 
contained in what is now brought to market. 

“If Seneca oil will supply more gas than 
animal oils, which I do not doubt, and if it 
can be procured at 25 cents per gallon, a fair 
trial of it in this way would assuredly be 
demanded by common prudence.” 

Oil coming from a salt well at Tarentum in 
Allegheny County began to give its owner, 
Samuel M. Kier, considerable difficulty about 
1849. He accumulated a large quantity of 
oil, but could find no market for it. His 
efforts even led to the erection of a small, but 
unsuccessful refinery in Pittsburg. This re¬ 
finery, however, did begin to achieve some 
degree of success about 1860. 

Mr. Kier finally began to bottle the oil and 
placed it on the market from the angle of its 
curative properties. One of his circulars 
bore the date January 1, 1852. 

This effort of Mr. Kier to obtain a market 
for his oil resulted finally in the drilling of the 

55 


OIL—NEW MONARCH OF MOTION 


Drake well—the first in the United States 
with petroleum as its purpose. It happened 
that about this time George H. Bissell of 
New York became interested in the possi¬ 
bilities of “rock oil.” After obtaining a 
tract of 105 acres of land in Cherry tree Town¬ 
ship, Venango County, Pennsylvania, for 
$5,000, Mr. Bissell and associates December 
30, 1854, incorporated under the laws of New 
York the Pennsylvania Rock Oil Company, 
with capital of $250,000. 

Other Eastern capitalists about the same 
time became convinced that it would be 
profitable to produce oil. They, however, 
were unwilling to subscribe to the stock of a 
company incorporated under the laws of 
New York. Consequently the Pennsylvania 
Rock Oil Company on September 18, 1855, 
was incorporated under the laws of Connec¬ 
ticut with a capital of $300,000. 

This first company formed to produce oil 
in the Pennsylvania fields intended at the 
time of organization to obtain its product by 
ditching and developing the surface of the 
property. Little was accomplished in the 
first year or two because of a lack of har¬ 
mony among the stockholders, and in 1856 
56 


HISTORY OF OIL DEVELOPMENT 


Mr. Bissell read one of the Kier circulars 
stating that the oil which he was selling was 
obtained from a depth of 400 feet under the 
earth’s surface. This was the genesis of the 
Drake well. 

Mr. Bissell consulted with J. G. Eveleth, 
who had been his harmonious associate since 
they purchased the land. Mr. Eveleth fav¬ 
ored the plan, but the two men were not 
in a position to finance it. The proposition 
was placed before a Mr. Havens of New 
York, who indicated his attitude by offering 
them $500 if they would obtain from the 
Pennsylvania Rock Oil Company a lease on 
the property. This finally was obtained, the 
terms being that Havens was to commence 
operations within a year and pay 12 cents a 
gallon royalty on all oil produced in fifteen 
years. 

Mr. Havens did not comply with the terms 
of his lease, so the capitalists who went into 
the company when the stock was increased 
to $300,000, acting against the wishes of the 
other directors, made a lease to E. E. Bow- 
ditch and E. L. Drake at a royalty of 5§ cents 
a gallon. This lease, however, soon was sup¬ 
plemented by another making the royalty 12 
57 


OIL—NEW MONARCH OF MOTION 


cents and the lease for a period of 45 years. 
It was with this lease as a basis that the 
Seneca Oil Company was formed March 23 , 
1858. 

Mr. Drake, who was superintendent for the 
Seneca Oil Company, reached Titusville in 
May, 1858, and immediately began a search 
for someone to drill the well. From the 
ditches he gathered a small quantity of oil, 
but his principal attention was directed to 
the well proposition. 

Failing to dig a well to solid rock, he began 
the construction of a drill house, ordered an 
engine and completed arrangements with a 
driller. Although he had expected to com¬ 
mence drilling operations in September, the 
failure of the engine to arrive and the fact 
that sufficient funds were not forthcoming 
caused the work to be postponed for the 
winter. 

In the spring the driller he engaged failed 
to appear, so Drake finally employed “Uncle 
Billy ” Smith, who, with his two sons, reached 
Titusville about the middle of June. It 
already having been found impossible to dig 
down to bed rock, Drake conceived the idea 
of driving a pipe down through the soil. 

58 


HISTORY OF OIL DEVELOPMENT 


This was done and bed rock was found at a 
depth of 36 feet. Drilling then was begun. 

The drill was started in May and oil was 
struck on the afternoon of August 28, 1859, 
at a depth of 69J feet. The oil rose to 
within ten feet of the surface. The well then 
was equipped with a pump and is said to have 
produced 40 barrels a day for a short time. 
By the end of the year it was producing only 
about 15 barrels a day. This oil found a 
ready sale at 50 cents a gallon. 

What is believed to have been the second 
well drilled in the Oil Creek district was on 
the Buchanan farm near Rouseville. This 
well was drilled into the first sand by Rouse 
and Mitchell in December, 1859. Eight 
barrels a day were pumped from it for some 
time, and it then was drilled to the third 
sand and produced 300 barrels a day. After¬ 
wards, however, it was abandoned, to be pur¬ 
chased in 1871 by Gould and Stowell. The 
new owners cleaned it out and it began to 
produce again. 

In the meantime other companies had been 
formed, both for extracting oil out of coal 
and for drilling into the oil sand. Produc¬ 
tion of oil from all sources in the Pennsyl- 
59 


OIL—NEW MONARCH OF MOTION 


vania region in 1859 has been estimated at 
8,500 barrels, this figure also including that 
from the oil springs in the neighborhood of 
Cuba, N. Y. The 1859 production of the 
Drake well was estimated at approximately 
2,000 barrels. 

Oil-development operations were pushed 
in 1860 in the lowlands along Oil creek, 
French creek and the Allegheny river, oil 
being found at Tidioute, Henry’s Bend, 
Franklin and Smith’s Ferry. The building 
of two refineries was begun at Erie. Pitts¬ 
burgh, however, in that year formed the 
principal market, which was reached by boats 
and teams. It was not until 1856 or 1866 
that the advantage of pipe line transportation 
began to be realized. 

The first “gushers” were completed in 
1861. The first was on Oil creek near Rouse- 
ville. Several of these flowing wells spouted 
at the rate of 2,000 to 2,500 barrels a day, the 
oil flooding the territory adjacent to the wells. 
Oil could be purchased as low as 5 cents a 
barrel. 

It was on April 17, 1861, that there oc¬ 
curred at the Little and Merrick well on the 
Buchanan farm the first great tragedy of the 
60 


Scene at Oil City 
Center of Pennsylvania fields 






















































































HISTORY OF OIL DEVELOPMENT 


oil fields. A crowd had been attracted to the 
well, which was flowing about 3,000 barrels a 
day, when an explosion occurred, the oil burst 
into flames and 19 persons were burned to 
death, 11 others being terribly injured. 

Until 1864 developments were confined to 
the localities already mentioned, but in that 
year the Oil Creek operations were extended 
up Cherry Run, and there was a great deal of 
excitement in all parts of the country. 

The next year, 1865, which saw the col¬ 
lapse of many speculative oil propositions, 
witnessed the discovery of the Pithole pool. 
Wells also were brought in in various other 
localities. Clarion county began to attract 
attention in 1866, and in that year a rail¬ 
road was built into Venango county. A small 
well was struck near Bradford in 1868. It is 
estimated that in 1869 there were 1,186 pro¬ 
ducing wells. Butler, Armstrong and Clarion 
counties and Church Run, near Titusville, 
were the centers of activity. 

Butler and Clarion counties produced 
numerous “gushers” in 1872, with a conse¬ 
quent decline in values in spite of numerous 
ingenious schemes on the part of producers to 
maintain prices. What is known as the 
61 


OIL—NEW MONARCH OF MOTION 


Butler and Armstrong cross belt was dis¬ 
covered in 1874, production being far in 
excess of the market demand. Warren 
county became an oil country in 1875. 

The Allegheny field reached its height in 
1882, while 1883 saw the development of 
the Balltown and Cooper pools in Forest 
county. Washington county was added to 
the list in 1885, Greene county following 
shortly. McKean and Elk counties then be¬ 
came producing territory. 

As the state’s production approached the 
maximum, prices in 1887 went down to an 
alarmingly low figure. From 1871 to 1878 
annual production is estimated to have aver¬ 
aged about 10,000,000 barrels, while the 
region from 1879 to 1886 showed an average 
of 25,000,000 barrels. Among the districts 
discovered in 1888 were Canonsburg, Mur¬ 
docks ville, Nineveh and Crafton, the Brad¬ 
ford and Allegheny fields beginning to de¬ 
cline. 

The high point of production for the Penn¬ 
sylvania-New York territory was reached in 
1891, with 33,009,236 barrels. 

The year opened with the price of oil around 
75c. a barrel, and closed at about 60c. The 
62 


HISTORY OF OIL DEVELOPMENT 


value of the production, therefore, was in the 
neighborhood of $22,000,000. 

The entire Appalachian field, exclusive of 
Kentucky, produced in 1917 slightly less than 
25,000,000 barrels, but, with an average 
price of more than $3 a barrel, the value was 
approximately $75,000,000 or more than 
three times the 1891 Pennsylvania-New York 
figure. 

Sistersville forged to the front in 1892, 
while the Brownsdale pool in Butler county 
began to attract attention in the following 
year. Numerous pools were opened up in 
the next few years, and the limits of the older 
ones extended. 

Nothing approaching a sensation devel¬ 
oped in Pennsylvania until 1911, when a 
900-barrel was drilled in Green county. 
This, however, showed a rapid decline in 
production. In the meantime the annual 
output had declined steadily. Southwest 
Pennsylvania supplied two new pools in 1914, 
one at Evans City in Butler county and the 
other in Indiana township, Allegheny county. 
In the first pool, the initial well was a 200- 
barrel producer drilled on the Lutheran 
Church lot in the town of Evans City. 

63 


OIL—NEW MONARCH OF MOTION 


From Pennsylvania and New York the 
oil-producing territory of the East was ex¬ 
tended to Ohio, West Virginia, Kentucky and 
Indiana. California and the Gulf Coast 
fields were added. Then a field was opened 
on the Indiana-Illinois line. Shortly after 
that the interest of the oil producers began to 
turn to the Mid-Continent field, the greatest 
present producing section of the United 
States. 

From the Oklahoma and Kansas fields of 
the Mid-Continent territory, the producers 
in 1918 and 1919 made a rush to North Cen¬ 
tral Texas, known as the Ranger district 
and which is an extension to the Mid-Con¬ 
tinent field. 

This gives promise of becoming one of the 
most prolific producing territories in the his¬ 
tory of oil development. In the meantime 
the fields of Mexico have been the scene of 
greater and greater activity, while produc¬ 
tion in Wyoming also has gained steadily and 
new pools have been opened in North Lou¬ 
isiana. 

The oil development in West Virginia fol¬ 
lowed closely that of Pennsylvania. Oil was 
discovered in shallow pits near Parkersburg 
64 


HISTORY OF OIL DEVELOPMENT 


just before the Civil War. Approximately 
3,000,000 barrels of oil, which are estimated 
to have been valued at $20,000,000, were 
taken out of the various districts of West 
Virginia from 1865 to 1876. 

West Virginia was about ten years behind 
Pennsylvania in attaining the high point of 
production. Pennsylvania made its record 
in 1891 with 33,009,236 barrels, while West 
Virginia attained its record output in 1900, 
with 16,195,675 barrels. 

Since these years the production trend in 
both states has been gradually downward, 
although the oil, because of its high gasoline 
and lubricating oil content, demands the 
highest market price of any petroleum pro¬ 
duced in the country, the value in 1918 hav¬ 
ing been upward of $75,000,000 for the crude 
product at the wells. 

Drilling in the Lima field of Ohio was 
started in 1885, although oil had been pro¬ 
duced in the eastern section of the state prior 
to that time. The earlier drilling was an 
extension of the development of the Pennsyl¬ 
vania and West Virginia fields. 

Government reports first place Ohio in the 
producing ranks in 1876, with 31,763 barrels. 

65 


OIL—NEW MONARCH OF MOTION 


Production in 1884 amounted to 90,081 bar¬ 
rels, advancing in 1885 to 661,580 barrels, in 
1886 to 1,782,970 barrels, in 1887 to 5,022,- 
632 barrels and in 1888 to 10,010,868. Ohio’s 
greatest year was 1896, with 23,941,169 bar¬ 
rels. Since that time the decline has been 
gradual until in 1918 the marketed output 
of the Lima-Indiana field, which embraces 
northwestern Ohio and adjacent territory in 
Indiana, was only 3,100,000 barrels. 

Indiana is officially credited with entering 
the producing ranks in 1889, with 33,375 bar¬ 
rels, although scattered wells of small pro¬ 
duction had been drilled prior to that time. 
Indiana’s high point was in 1904, with 11,- 
339,124 barrels. 

Illinois is said to have been the scene of 
oil drilling about the time of the oil rush in 
Pennsylvania. This work, which is reported 
to have resulted in small showings of oil, was 
in Clark county, a few miles north of Casey, 
which, many years later, became the center 
of a vigorous and profitable development, oil 
being found at comparatively shallow depths. 

Production of 1,460 barrels was credited 
to Illinois in 1889. This had dropped by 
1902 to 200 barrels, while no production was 


HISTORY OF OIL DEVELOPMENT 


reported in 1903 or 1904. Thereafter the 
Illinois “boom” started, a 35-barrel well being 
completed near the old tests in Clark county. 
The state’s output in 1905 was 181,084 bar¬ 
rels, being increased in 1906 to 4,397,050. 
Production in 1907 leaped to 24,281,973 and 
in the following year attained its high point 
of 33,686,238 barrels. The state’s output in 
1918 is estimated at 13,300,000 barrels. 

Kentucky, which in 1917, 1918 and 1919 
was the scene of the greatest activity east of 
the Mississippi river has a petroleum his¬ 
tory that is crammed with interest. In fact, 
it is asserted that it was in Kentucky that the 
first flowing well in the United States was 
recorded. The well was drilled in the south¬ 
east corner of Wayne county in 1818 by 
David Beatty, but Beatty was not seek¬ 
ing oil; his quest was for salt. At a depth of 
170 feet petroleum began coming out of the 
well with salt water. 

The flow attained such volume that oil 
covered the surface of the water in the Big 
South Fork of the Cumberland river. The 
floating oil caught fire and the surface of the 
river blazed fiercely for a distance of 35 miles 
to the junction of the fork with Cumberland 
67 


OIL—NEW MONARCH OF MOTION 


river proper. Finally the flow of oil ceased, 
the fire went out and the well came to be for¬ 
gotten. 

Another salt well was “ruined” by oil in 
1829. This well, which was 180 feet deep, 
was near Burksville in Cumberland county. 
The flow lasted three or four weeks, the oil 
in the meantime becoming ignited and pro¬ 
viding a repetition of the occurrence of the 
Beatty well. 

The next incident in the development of 
the Kentucky oil fields is believed to have 
been in 1865, when C. H. English drilled eight 
shallow wells along Crocus creek. 

One of these wells is reported to have 
flowed 900 barrels a day, but the wells were 
abandoned because there were no means of 
transporting the oil to market. 

A well which is reported to have pro¬ 
duced 1,000 barrels of high-grade oil in 24 
hours was drilled in 1865 at Cloyd’s landing, 
six miles southwest of Burksville. J. W. 
Sherman, who had gained considerable fame 
as an operator in the Oil Creek District of 
Pennsylvania, drilled this well. In order 
to market some of the oil he loaded a barge 
with it and started to ship it in bulk to 
68 


HISTORY OF OIL DEVELOPMENT 


Nashville, Tenn. The barge, however, was 
wrecked. The oil excitement in Pennsyl¬ 
vania was at a high stage and Sherman re¬ 
turned to that state. 

Clinton county, which lies between Wayne 
and Cumberland, also was one of the pioneer 
Kentucky oil counties. A salt water well 
drilled about 1827 produced oil. 

It is related that in 1864 L. D. Carter of 
Aurora, Ill., saw the well and, believing that 
the oil would prove an excellent lubricant, 
obtained a small quantity of it and submitted 
it to a railroad company for a test. The 
result was that the railroad company agreed 
to purchase the oil and Carter for several 
years delivered six or eight barrels of the oil 
a day in wagons, hauling it to the Cumber¬ 
land river. 

This Clinton county well again attracted 
attention in 1892, when J. Hovey cleaned it 
out and made it a profitable producer. He 
also drilled three other wells, one of which is 
reported to have produced 2,400 barrels of 
heavy oil in two months. The wells, how¬ 
ever, eventually were shut down because of 
lack of storage facilities and transporta¬ 
tion. 


69 


OIL—NEW MONARCH OF MOTION 


The Hovey property and other holdings in 
that territory were acquired about 1897 by 
the Standard Oil Company. This company 
also drilled in Wayne county, opening what 
was known as the Slick Fork pool. 

Another early spectacular oil development 
occurred in Lincoln county in 1839. A well 
drilled for salt water a few miles from Stan¬ 
ford struck oil, the petroleum catching fire 
and burning for several weeks. 

Barren county became the scene of oil 
activity in 1861, the first well being drilled 
three miles south of Glasgow. It produced 
some oil, and other wells were drilled. Four 
shallow wells were drilled along Green river 
about 12 miles south, one of which flowed for 
a while at the rate of 400 barrels a day. 

From the early days of the settlement of 
the country in the northeastern section of 
Kentucky, it is related that petroleum was 
obtained for medicinal purposes from the 
surface of streams. This was in Boyd, Car¬ 
ter, Greenup, Johnson and Lawrence coun¬ 
ties. 

The absence of a market for oil resulted in 
the halting of development shortly after the 
drilling of a well in 1860 eight miles above 

70 


HISTORY OF OIL DEVELOPMENT 


Paintville. This well at a depth of 250 feet 
found a heavy oil, but the production of the 
well was not ascertained. An aggressive 
development along Paint creek was carried 
out in 1864 and 1865, several hundred shallow 
wells being drilled—but Pennsylvania so 
overshadowed this development that the 
operators Werfe compelled to withdraw until 
more favorable conditions accompanied their 
efforts. 

To the south in Tennessee, numerous wells 
are reported to have been drilled in 1894 and 
1895 along Spring creek. An oil lighter both 
in color and gravity than the Kentucky prod¬ 
uct was obtained. It is only just now, how¬ 
ever, that a serious effort is being made to 
develop it. 

The United States Geological Survey has 
kept the production figures for Kentucky and 
Tennessee together. The Tennessee pro¬ 
duction, however, has been so small that the 
figures for all practical purposes may be re¬ 
garded as Kentucky’s output. 

The Government statisticians first recog¬ 
nized the field in 1883, when the two states 
were credited with an output of 4,755 barrels. 
Only a gradual gain was shown until 1891, 
71 


OIL—NEW MONARCH OF MOTION 


when an output of 9,000 barrels was attained. 
The following year, however, showed a slump 
to 6,500 barrels and the amount in 1893 
dropped to 3,000 barrels. It dwindled grad¬ 
ually then until 1897, when the two states 
were credited with a production of only 322 
barrels. In 1898, however, the amount had 
increased to 5,568 barrels. 

Thereafter the increase was rapid until 
1905, when the amount first crossed the 
1,000,000-barrel mark. The 1905 total was 
1,217,337 barrels. Practically the same 
amount was produced in 1906. Then in 
1907 it dropped to 820,844 barrels. From 
that year until 1916 the Geological Survey 
credits no production to Tennessee. 

The output dropped gradually until it 
had receded to 468,774 barrels in 1910. 
Then it began to gain gradually until another 
high point of 524,568 barrels was recorded 
in 1913. By 1915, however, it had fallen 
to 437,274 barrels. 

But, to indicate the suddenness with which 
Kentucky and Tennessee are attaining prom¬ 
inence in the petroleum world, one has but 
to consider the figures for 1916, when the 
two states are credited by the Geological 

72 


HISTORY OF OIL DEVELOPMENT 


Survey with an output of 1,208,246 barrels, 
almost three times the 1915 output. 

C. R. Dulin, now of Lexington, Ky., is 
largely responsible for this showing. It was 
he who in May, 1914, drilled a well in the 
Irvine field of Estill county, Kentucky. The 
well, although it had a production of only 
about five barrels a day, started a develop¬ 
ment that has resulted in hundreds of wells 
being drilled and several thousand barrels a 
day of oil being developed. 

It was not until 1915 and 1916 that the 
real Kentucky development began. At last 
reports there were recognized producing 
areas in 18 counties and showings reported 
in at least 25 other counties. 

The monthly quantity of oil being taken 
from the wells was reported in the spring of 
1919 to be closely approaching 700,000 bar¬ 
rels, which indicates that Kentucky’s output 
is growing steadily. In fact, the Kentucky 
State Geologist in the early summer of 1919 
estimated that the state’s output in that year 
would reach 7,500,000 barrels, valued at 
approximately $19,500,000. 

Neglected and overlooked in the growth of 
the oil industry westward, Kentucky, with 
73 


OIL—NEW MONARCH OF MOTION 


its shallow and comparatively inexpensive 
wells and interesting history, apparently is 
coming into its own as never before. 

Wyoming is another territory that, with 
oil indications reported as early as 1849, just 
now is entering the serious phase of its oil 
development. Already numerous fields have 
been opened and the year 1919 saw many new 
territories being opened and pipe lines being 
laid to provide a market for the production. 

A writer who visited the state in 1849 
chronicled that at what now is Hilliard, 
Uinta county, “a spring of petroleum or 
mineral tar oozes from the low bank of a little 
rivulet flowing into the valley of Sulphur 
creek.” The oil, it was said, was collected 
by the emigrants—for medicinal purposes 
and for greasing their wagon wheels. About 
the same time, according to State Geologist 
Trumbull, the Carter oil spring, six miles to 
the west, was discovered. 

It is stated that as early as 1863 oil was 
collected from a spring near Poison Spider 
creek and sold to emigrants passing over the 
old Morgan Trail. At that time the sales 
were limited to the demand for wagon grease. 

In 1883, however, a new use was found for 

74 


LOCATION OF 




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HISTORY OF OIL DEVELOPMENT 

the product. The ranchers in the Big Horn 
basin ran short of lamp oil and substituted 
crude oil gathered from a spring near Bonanza 
creek. 

The first well drilled in Wyoming from 
which production was marketed, says Mr. 
Trumbull, was the Carter well in Uinta 
county. The first “gusher,” according to the 
State Geologist, was drilled in the Dallas 
field in 1883, while the first wells at Shannon 
in the north end of the now famous Salt 
Creek field date from 1889. 

Production from the wells at Shannon, 
after the building at Casper in 1895 of a 
50-barrel refinery, was hauled to that town in 
wagons drawn by sixteen mules. 

The Salt Creek field proper was not drilled 
until 1908. The first well on this dome is 
said to have been located by an Italian geolo¬ 
gist at the roadside where it had been passed 
for a score of years by oil men, prospectors 
and even other petroleum geologists. 

For more than a dozen years oil from 
the Shannon wells had been hauled along 
this very road on its way to Casper—hauled 
across what now is the largest and one of the 
most productive oil fields in the state! 

75 


OIL—NEW MONARCH OF MOTION 


Of the light oil fields in Wyoming, Mr. 
Trumbull in 1917 listed nine as producers- 
They were Spring Valley, Salt Creek, Grass 
Creek, the Torchlight field at Basin, Grey- 
bull, Byron, Big Muddy, Elk Basin and 
Pilot Butte. Since that time other fields have 
been developed, the Lance Creek and Rock 
Creek districts in 1919 being the most active 
in the state. Vigorous development work 
also was being conducted in the Lost Soldier 
and other districts. 

“In several of the fields there is more than 
one productive sand,” explains Mr. Trum¬ 
bull in his bulletin. “Grass Creek, for in¬ 
stance, is producing from five, or possibly, 
seven, different sands.” 

Recent investigation of the oil sands that 
underlie the Salt Creek field is reported to 
have developed the fact that there are four 
Wall Creek sands instead of two of these 
strata. Two Wall Creek sands have been 
found productive in the Big Muddy field. 

The Wall Creek sands are regarded as the 
most productive in the territory. The first 
Wall Creek sand underlying the Salt Creek 
dome is encountered at a depth of 1,200 to 
1,400 feet. This sand is said to be approx- 

76 


HISTORY OF OIL DEVELOPMENT 

imately 110 feet thick. Below this about 
300 feet is the second Wall Creek, which in 
1918 produced the largest well ever com¬ 
pleted in Wyoming. The initial flow was 
estimated at from 8,000 to 10,000 and as high 
as 15,000 barrels a day. Each of the lower 
sands is also believed to be richly impreg¬ 
nated with oil. 

Wells in the Wall Creek sand have a 
relatively high initial yield, which is main¬ 
tained at a substantial figure over a long 
period. The first Wall Creek sand in the 
Big Muddy field is reported to have been 
found to have a depth of 200 feet, with a high 
saturation of oil from top to bottom. 

Government reports first list Wyoming as 
a producer in 1894, with 2,369 barrels. This 
had increased by 1911, including also Utah’s 
output, to 186,695 barrels. The Wyoming 
production leaped in 1912 to 1,572,306 and 
since that time the expansion has been steady 
until the district in 1918 is estimated by the 
United States Geological Survey to have 
produced 12,600,000 barrels. The refineries 
of Wyoming and Colorado in 1918 handled 
11,913,125 barrels of crude oil, as compared 
with 8,834,689 in 1917, a gain of 35%. Ap- 

77 

l 


OIL—NEW MONARCH OF MOTION 


parently Wyoming’s oil development still is 
far from its peak. 

Both asphalt and paraffin base oils are 
found in Wyoming, some of the light oils 
being extremely high in gasoline and lubri¬ 
cating content. In the crude from the Elk 
Basin field, for instance, the gasoline content 
is put at upward of 40%. The asphalt oils 
usually are subjected to “skimming” and 
the remainder sold as fuel oil. 


78 


V 


CALIFORNIA, GULF COAST AND 
MEXICO 

Three territories that produce petroleum 
of an asphalt base and upon which appa¬ 
rently will fall the tremendous burden of the 
future demand for fuel oil are California, the 
Gulf Coast territory of the United States and 
the fields of Mexico. The gasoline content of 
these oils is relatively low, but their “steam¬ 
ing value” in competition with coal and the 
many advantages they have over coal, makes 
them loom large both as to present and future 
importance. 

The first discovery of petroleum in Cal¬ 
ifornia is reported to have been made in 
Santa Barbara county in 1860 by sheep- 
herders who had taken their flocks thereto 
graze. Attempts also are said to have been 
made to produce oil in Ventura and Hum¬ 
boldt counties in 1864 and 1865. These 
efforts apparently were not fruitful. 

It was in 1865, according to the Standard 
Oil Bulletin published by the Standard Oil 

79 


OIL—NEW MONARCH OF MOTION 


Company of California, that a Mexican 
hunter who had followed a deer trail to the 
head of Pico Canon in Los Angeles county 
discovered a seepage of a sticky, black fluid. 
Curiosity prompted him to put a small quan¬ 
tity of it in his canteen and take it to the 
the San Bernardino mission settlement. It 
immediately was identified as petroleum by 
a Dr. Gelsich, who formerly had resided in 
the oil territory of Pennsylvania. He formed 
a company at once and staked out claims 
covering the scene of the discovery. 

In 1870 a well was drilled at the head of the 
canon, the driller being Stanford Lyon. The 
well is reported to have had initial produc¬ 
tion of between 70 and 75 barrels a day. 

The original well had been drilled by the 
old spring pole method, and in 1879 a steam 
engine was taken into the canon and the well 
drilled deeper. The engine still is on the 
original location and the well early in 1919 
was reported to be producing three barrels a 
day of 38° gravity oil—among the lightest 
oils in a state where heavy oils prevail. The 
field in which the well is located now is known 
as Newhall. 

Subsequent oil development in California 
80 


One of California's Great Oil Fields 
















CALIFORNIA, GULF COAST & MEXICO 


resulted in some of the greatest “gushers” 
in the country’s history, the most notable 
being known as the Lake view and Mayes. 
The greatest California producers were com¬ 
pleted largely in 1913. Prior to 1908 Cal¬ 
ifornia’s production was of a heavy fuel oil. 
Since that time, however, there has been a 
gradual gain in the output of oils of higher 
grade. 

Early in 1919 a well was completed in new 
territory at Yorba Linda with initial pro¬ 
duction of 20,000 barrels a day. This was 
23° oil. 

The oil pools of California are in the south¬ 
ern part of the state, from Fresno county to 
the Mexican border. Oil indications, how¬ 
ever, are said to have been encountered as 
far north as San Francisco. 

The California fields are located in three 
general sections, the San Joaquin Valley dis¬ 
trict, Ventura county and the Coast district. 
It is estimated that the oil territory in the 
San Joaquin district embraces about four 
times the area of the Coast district. In the 
San Joaquin section are the McKittrick, Kern 
River, Midway-Sunset, Lost Hills-Belridge 
and Coalinga fields. 


81 


OIL—NEW MONARCH OE MOTION 


The Coast district, which produces about 
20% of the state’s output, embraces the 
Summerland, Santa Clara Valley, Whittier- 
Fullerton, Los Angeles, Santa Maria and 
Puente Hill pools. 

Oil from the pools in the Coast fields aver¬ 
ages a much lighter gravity than that of the 
San Joaquin Valley district and is used largely 
for refining, while the San Joaquin oil, which 
is of a heavy, asphalt base, is mainly used for 
fuel and road oil. Although most of the 
California oils are of an asphaltic base, par¬ 
affin oil is found in the upper cretaceous for¬ 
mations in the Coalinga district. Geologic¬ 
ally the California oil producing territory 
represents a wide variety of structures. 

One of the wonders of the California oil 
development is at Summerland, where numer¬ 
ous wells have been drilled out in the bay 
and on the sand of the beach. The derricks 
in the bay are reached by trestles, which, in 
some cases, are several hundred feet in 
length. 

The first recorded oil output for Cali¬ 
fornia was in 1876, the year’s total being 
12,000 barrels. The production in 1880 
was only 40,522 barrels, which came mainly 
82 


CALIFORNIA, GULF COAST & MEXICO 

from the Ventura, Los Angeles and Santa 
Barbara districts. 

The field in the city of Los Angeles was 
developed in 1892, the wells being of the 
shallow depth of about 800 feet. 

Two mining prospectors, Edward L. Do- 
heny and C. A. Canfield, decided in 1892 that 
petroleum deposits existed under the city of 
Los Angeles. They had noticed brea or 
bituminized sand strata that had been ex¬ 
posed by grading for a street in the western 
part of the city. 

Their knowledge of petroleum was slight, 
but Mr. Doheny did know something of the 
laws of physics. He studied the pitch of 
the impregnated stratum and decided at 
what depth the sand would be saturated with 
the oil. He demonstrated the theory to his 
partner by laying a lump of sugar in a spoon 
of coffee. The coffee by capillary attraction 
rose into the sugar, which was heavily 
saturated at the bottom, the saturation be¬ 
coming less and less pronounced toward the 
top of the lump. This, Mr. Doheny main¬ 
tained, was the condition existing in the 
stratum they had observed. 

Forthwith the prospectors purchased a 

83 


OIL—NEW MONARCH OF MOTION 


corner lot 40 by 140 feet in the residential 
section of the city at a point where they 
judged the highly saturated stratum to be at 
a depth of 200 feet or less. Then they started 
their well—not drilling, but digging it with 
pick and shovel, as they had been wont to 
do in their mining explorations. A two- 
compartment shaft 5 by 7 feet was sent down 
to a depth of 155 feet. 

Some gas already having been encountered, 
the two men decided they had best change 
their well digging methods—for, if they 
had found what they were after, both prob¬ 
ably would have been suffocated before they 
could have gotten out of the hole. 

So they obtained a eucalyptus pole about 
50 feet long, sharpened it and went to work 
drilling by the “spring pole” method. Finally 
a heavy oil came oozing up out of the drill 
hole, which had been sent to a depth of 15 
feet below the bottom of the shaft. About 
six barrels of oil daily were taken from the 
well. It graded 17° Baum6. 

Other wells then were drilled, the methods, 
in spite of the fact that neither Doheny nor 
Canfield ever had seen an oil field, being 
gradually improved. A short time later 
84 


CALIFORNIA, GULF COAST & MEXICO 


George Owens, a former Pennsylvanian, was 
employed as a driller—and thereafter the 
Doheny operations were on a modern basis. 

Later Mr. Doheny extended his activity 
to Mexico and now is one of the foremost as 
well as wealthiest men in the oil industry. 

From the time of the opening of the Los 
Angeles field the production in California 
increased rapidly. The output in 1895 was 
1,208,482 barrels. In 1903 the state took 
first rank as a petroleum producer with 
24,382,472 barrels. Oklahoma produced 
more petroleum than California in 1907 and 
1908, but in 1909 California again took first 
place with 54,433,010 barrels. The gain was 
steady from then until 1914, when a high 
point of 99,775,327 barrels was reached. 
Then came a slight falling off, with a 1917 
production of 93,877,549 barrels. 

California, in 1918, however, set a new 
record, producing, according to the Geo¬ 
logical Survey’s estimate, 101,300,000 barrels. 

The opening of the Gulf Coast district, 
which embraces the coastal plain of Louisiana 
and Texas was perhaps the most spectacular 
event in the annals of the oil industry in the 
United States. 


85 


OIL—NEW MONARCH OF MOTION 


The Discovery well at Spindletop, near 
Beaumont, Texas, came in with a roar, ran 
wild for ten days and is estimated to have 
attained a maximum flow of 100,000 barrels 
a day. 

This well was completed January 10, 1901, 
by Captain Anthony F. Lucas, now of Wash¬ 
ington, D. C., after overcoming a most heart¬ 
breaking series of obstacles, both financial 
and in drilling practice. 

Oil-well drilling prior to that time had been 
with cable outfits. This system was not suc¬ 
cessful in the unconsolidated formations en¬ 
countered, so Captain Lucas was compelled 
to adopt the hydraulic rotary method, he 
previously having used this system in explor¬ 
ing the rock salt deposits of Louisiana— 
which explorations, by the way, were respon¬ 
sible for his arriving at the belief that the 
dome structures in that section of the coun¬ 
try contained petroleum deposits. 

Captain Lucas also devised a check valve 
for overcoming the terrific pressure from 
below that made the dissolution of the enter¬ 
prise seem imminent. 

The great Spindletop well was completed 
at a depth of about 1150 feet and at a cost of 
86 


CALIFORNIA, GULF COAST & MEXICO 


less than $6,000. It marked the beginning of 
the fuel oil era, was followed by the formation 
of some of the most powerful independent 
oil companies of the country and opened an 
oil territory that up to the end of 1918 had 
produced close to 400,000,000 barrels of 
petroleum. 

The Standard Oil Company, which at that 
time was dominant in the oil industry, looked 
upon the development as without merit be¬ 
cause of the heaviness of the oil. This gave 
a clear field to the independent companies. 
The oil from the Lucas well, which was fol¬ 
lowed by “gusher” after “gusher” was of an 
asphalt base, graded 23° Baume and had a 
sulphur content of 2 to 4%. 

Many oil men other than the Standard 
Oil's experts held the heavy sulphurous oil, 
which was of a decidedly unpleasant odor, to 
be practically worthless. The refineries then 
in operation were not equipped to handle it. 
Its use as fuel as a substitute for coal was 
suggested, but the objection was raised that 
the sulphur would prove injurious to boiler 
fire boxes. This, however, proved a fallacy. 

The Spindletop boom was perhaps the 
greatest ever seen in the United States, with 

87 


OIL—NEW MONARCH OF MOTION 


the exception of the California gold rush of 
1849. Land values, leases and options shot 
skyward. Although the productive area 
proved to be only about 300 acres, the spec¬ 
ulative frenzy was not limited by acreage. 

Before the advent of the well, common 
prairie land in that locality was valued at 
about $5 an acre Then up it went through 
the hundreds into the thousands and then 
into the hundreds of thousands. Quarter- 
acre tracts sold for from $50,000 to 
$ 100 , 000 . 

Tracts as small as 25 by 25 feet changed 
hands, Captain Lucas relates, some of the 
leases only affording sufficient room for the 
erection of the derrick. Boiler room had to 
be arranged for by obtaining surface rights 
from a neighbor. 

In one instance four companies, each capi¬ 
talized at $1,000,000, owned jointly a tract 
45 by 45 feet. The companies contributed 
equally to a fund for drilling a well in the 
center of the lot, each owning a one-fourth 
interest in the production. The well was 
completed and each company was enabled 
to advertise its stock in full-page displays in 

newspapers throughout the country. Need- 
88 


CALIFORNIA, GULF COAST & MEXICO 

less to say, there were many disappointed 
stockholders. 

Captain Lucas had many opportunities 
to lend his name to stock-jobbing schemes, 
but be it said to the pioneer’s everlasting 
credit that he would permit none of it. In 
one case he was offered 10% of the capital 
stock of a $1,000,000 company for the use of 
his name. It was to be the Lucas Oil Com¬ 
pany and Captain Lucas was to be president. 

Naturally the prospective president man¬ 
ifested interest regarding the company’s 
assets. The promoters spoke confidently, 
but in general terms. Then Captain Lucas 
demanded that he be taken to inspect the 
acreage. But, insisted the promoters, he 
was such a busy man that it shouldn’t be 
necessary to take up so much of his time— 
anyhow, wouldn’t a map do just as well? A 
glimpse of the map was sufficient, and Cap¬ 
tain Lucas quietly declined the proposition. 
The promoters insisted on knowing his 
reason. 

“There is no oil on that land!” Captain 
Lucas finally retorted in order to close the 
interview. 

“What’s that to you, Captain Lucas, so 

89 


OIL—NEW MONARCH OF MOTION 


long as you are made president and get your 
10% of the capital stock, which would be 
worth par as soon as we incorporate ?” 

This came rather heatedly from the leader. 

The spokesman of the promoters went 
through the door without any effort on his 
part. Of such stuff are made the men who 
are the backbone of the industry. 

More than one spectacular fire was caused 
by oil held in earthen storage at Spindletop, 
as well as by the crowding of derricks on the 
dome. One of the most serious conflagra¬ 
tions occurred on March 3, 1901, less than 
two months after the discovery. It is esti¬ 
mated that 800,000 barrels of oil went up in 
the flames. 

Finally solid development followed the 
hectic, boom period. Pipe lines were laid 
and refineries erected in the Gulf Coast ter¬ 
ritory. The discovery was the signal for a 
vast amount of exploration work on various 
other structures. 

Following is a partial list of oil pools opened 
in this territory since the Lucas discovery: 
Jennings, Anse, La Butte, Saratoga, Vinton, 
Edgerly, Welsh, New Iberia, Caddo and Pine 
Island in Louisiana, and Sour Lake, Batson, 

90 



Flaming Oil Tank, Mid-Continent Field 














CALIFORNIA, GULF COAST & MEXICO 


Humble, Goose Creek, Hoskins Mound, 
Matagorda, Big Hill, Markham, Bryan 
Heights, Damon Mound, West Columbia and 
Hull in Texas. 

The Gulf Coast is credited in 1917 with 
having produced 26,087,587 barrels, while the 
1918 output is estimated to have been 21,700,- 
000 barrels. 

The most spectacular of all the oil “gush¬ 
ers” have been drilled in Mexico, recognized 
as the greatest potential source of fuel oil. 
One well completed early in 1916 showed the 
tremendous initial flow of 260,000 barrels a 
day—the greatest “gusher” in the history of 
petroleum. One well in Mexico was said to 
have produced up to about the end of 1918 
approximately 90,000,000 barrels of oil. 

Most of the production in Mexico is owned 
by American companies and it is estimated 
that in 1918 some 36,500,000 barrels of crude 
oil were shipped from Mexico to the United 
States. Some authorities place this estimate 
much higher. About 14,000,000 barrels are 
reported to have been exported from Mexico 
to other countries. The 1918 year, because 
of the growing demand for fuel oil, saw vigor¬ 
ous development work in the southern re- 
91 


OIL—NEW MONARCH OF MOTION 


public, wells with initial flow as high as 
100,000 barrels a day being reported. 

It has been possible, however, because of 
internal conditions in Mexico and as a result 
of a shortage of ships, to market only a frac¬ 
tion of the potential output of the wells 
already drilled—which early in 1919 was esti¬ 
mated at upward of 1,000,000 barrels a day. 

The first year in which petroleum produc¬ 
tion was recorded in Mexico was in 1904, 
when the output was 220,653 barrels. By 
1910 it had increased to 3,332,807 barrels. 

In 1911, however, the output leaped to 
14,051,643 barrels, this being largely the 
result of the bringing in of the famous 
Casiano No. 7 well in September, 1910. This 
well, since that time, is estimated to have been 
producing at an average rate of more than 
20,000 barrels a day. The well in 1917 is 
estimated to have produced nearly 8,000,000 
barrels, putting its total output since it was 
drilled up to nearly 60,000,000 barrels, or an 
amount practically equivalent to the entire 
Mexican output in 1917. 

The greatest well in the world’s history was 
completed in Mexico in February, 1916, 
when the Cerro Azul began to gush with a 
roar. Before it was brought under control 
92 


CALIFORNIA, GULF COAST & MEXICO 


it is estimated to have reached a maximum of 
260,000 barrels a day. This great well has 
been producing 30,000 to 50,000 barrels a 
day with the valve that governs its flow 
opened only slightly. 

Permitted to flow at its initial capacity this 
well would produce oil at the rate of 180 bar¬ 
rels a minute—or three barrels each second. 
In a month the well would be capable of 
producing 7,800,000 barrels of petroleum— 
and, in a year, 94,900,000 barrels. 

The following table shows the amount of 
crude oil produced in Mexico from 1904 to 
the end of 1918: 


Year 

Production (Barrels) 

1904. 

220,653 

1905. 

320,379 

1906. 

1,097,264 

1907. 

1,717,690 

1908. 

. . . 3,481,610 

1909. 

.. . 2,488,742 

1910. 

3,332,807 

1911. 

.. . 14,051,643 

1912. 

.. . 16,558,215 

1913. 

... 25,902,439 

1914. 

.. . 21,188,427 

1915. 

.. . 35,500,000 

1916. 

. . . 39,801,110 

1917. 

. . . 55,292,770 

1918 (estimated).. . 

.. 63,000,000 


93 


283,953,749 


















OIL—NEW MONARCH OF MOTION 


Although the oil deposits of Mexico were 
known to exist as early as the time of the 
Spanish occupation, nothing was done toward 
their development until 1868 , when a Dr. 
Autray located the oil springs of Cugas and 
converted their yield into illuminating oil by 
means of a small still. Limited capital and 
the absence of a demand for the product 
finally resulted in the project being aban¬ 
doned. 

It was not until the early 80 ’s that British 
interests decided to make an effort to develop 
the Mexican oil reserves. With the co-op¬ 
eration of American engineers and capitalists, 
drilling operations were started on a small 
scale. 

The American engineers, however, did not 
appear to be well disposed toward the British 
activity. The result was that the British 
capitalists became disgusted with the lack of 
progress being made and finally withdrew 
from the project. That was just what the 
American engineers had been working 
for. 

They then went to the American financiers 
who had been interested in the plan, ex¬ 
plained the situation and sought further sup- 
94 


CALIFORNIA, GULF COAST & MEXICO 


port. The drillers, however, were doomed 
to disappointment, for the Americans con¬ 
strued the suggestion as an excuse for wasting 
additional money. They could not see why 
they should make an additional outlay when 
the other money that they had invested along 
with that of their British associates had 
brought no return. 

Sir Weetman Pearson, now Lord Cowdray, 
was engaged in the early 90’s in the recon¬ 
struction of the Isthmian or Tehuantepec 
railway. On one of his visits to the scene of 
the construction work, the head of the firm 
observed evidences of oil near the railway 
line. Drilling was begun and oil was struck. 
Almost immediately there was erected a 
refinery with a capacity of 1,400 tons of crude 
oil daily. Thus began the real development 
of the Mexican oil fields. 

The Pearson interest extended their field of 
operation, other capitalists soon obtained 
holdings in the territory and the immense 
reservoirs of oil lying in northern Vera Cruz 
soon were brought to light. It is in this 
district that the largest well in the world is 
located. 

Another pioneer in the oil fields of Mexico 

95 


OIL—NEW MONARCH OF MOTION 


is Edward L. Doheny, who made his first 
purchases of leases in Mexico in 1900. With 
his partner, C. A. Canfield, this American 
petroleum expert prospected the jungles of 
Mexico in search of oil seepages. 

Finally they hit upon the plan of offering 
the Mexicans five pesos each for pointing out 
to them the location of “tar spots.” The 
plan worked successfully, and they were lit¬ 
erally bombarded with “tar spots,” the 
result being that they obtained leases on 
thousands of acres of land that to-day lie 
in the very center of oil-producing 
territory. 

Most important of the oil fields of Mexico 
are those in the southern part of the State of 
Tamaulipas and the northern half of the 
state of Vera Cruz. They extend for about 
50 miles back from the Gulf coast toward 
the foot hills in the states of Hidalgo and 
San Luis Potosi. 

Important among the producing areas in 
this field are those known as Ebano, Panuco, 
Topila, Juan Casiano, Cerro Azul, Potrero del 
Llano, Agua Nacida and Alamo. This ter¬ 
ritory extends roughly from the seaport of 
Tampico southward to Tuxpam. The Pan- 

96 


CALIFORNIA, GULF COAST & MEXICO 


uco pool lies only a short distance southwest 
of Tampico. 

The present most active area of develop¬ 
ment, known as the southern field, lies on 
down the coast south of Tampico. 


97 


VI 


MID-CONTINENT FIELD 

Greatest of the oil fields of the United 
States is the Mid-Continent territory, em¬ 
bracing Oklahoma, Kansas, Northern Texas 
and Northern Louisiana. First Oklahoma 
held the limelight in this territory; then 
Kansas came in for some concerted atten¬ 
tion, while in 1918 and 1919 the Ranger ter¬ 
ritory of North Central Texas became the 
center of attraction to oil producers through¬ 
out the country. At that time it appeared 
that the Ranger territory would prove per¬ 
haps the greatest field in the nation’s 
history. 

The North Central Texas territory in 
May, 1919, was producing close to 160,000 
barrels of oil daily—and numerous wells either 
were shut in or drilled only to the top of the 
sand pending the construction of pipe lines. 

The petroleum found in the Mid-Continent 
field is of a mixed paraffin and asphalt base, 
ranging from 28° Baum6 near Humboldt, 
Kansas, to upward of 40° in the Cushing dis- 

98 


MID-CONTINENT FIELD 


trict of Creek county, Oklahoma, and as high 
as 49° in the Garber field of Garfield county, 
Oklahoma. 

Although the real development of this at 
present richest oil section in the United States 
did not begin until about 1904, it is recorded 
that prospecting was done in Kansas as early 
as 1860. G. M. Brown in that year at¬ 
tempted to drill a well near Paoli, Kansas, 
but, because of faulty drilling methods and 
a lack of machinery, nothing was accom¬ 
plished. Drilling, however, was resumed in 
1873, when several gas wells were completed 
near Paoli. 

In 1889 about 500 barrels of oil were pro¬ 
duced by a small well in Kansas. Petroleum 
requirements at that time were taken care of 
by the eastern fields, and it was not until 
some ten years later that any serious devel¬ 
opment work was undertaken. 

As early as 1884 the Choctaw and Cherokee 
Indian nations of Oklahoma (then Indian ter¬ 
ritory) passed laws authorizing the organiza¬ 
tion of companies to drill for oil. These 
companies were merged under one control and 
in 1885 Dr. H. W. Faucett of New York began 
drilling operations near Atoka in the Choctaw 

99 


OIL—NEW MONARCH OF MOTION 


nation and near Talequah in the Cherokee 
nation. 

The Cherokees in the following year re¬ 
pealed the law, which, although it later was 
re-enacted, caused the New York capitalists 
who were interested with Dr. Faucett to 
withdraw their support. St. Louis capital¬ 
ists later were interested, but Dr. Faucett 
died in 1888 without having accomplished 
anything. 

The next attempt at drilling in Oklahoma 
was made by Michael Cudahy of Omaha, 
Nebraska, who, in 1884, had obtained a 
blanket lease on the territory owned by the 
Creek nation. He drilled a well near Mus¬ 
kogee, finding a small quantity of oil at a 
depth of 1,120 feet. An effort was made to 
drill deeper, but it was necessary to abandon 
the well at a depth of 1800 feet. A second 
well then was drilled and oil encountered at 
645 feet. This well also was abandoned at 
1,300 feet. 

A lease on a large part of the lands held by 
the Osage nation was obtained about this 
time by E. B. Foster, who completed a well 
producing five barrels a day. An unpro¬ 
ductive well was drilled near Eufala in the 
100 


MID-CONTINENT FIELD 


following year. The passage of legislation 
that was not favorable to oil developmnt re¬ 
sulted in practically nothing further being 
accomplished for about ten years. 

In 1906 two doctors, Clinton and Bland, 
completed a productive well in the Tulsa- 
Red Fork district in the Creek nation. In 
the same year Galbrath and Colcord com¬ 
pleted the first well in what now is the famous 
Glenn pool. This caused vigorous develop¬ 
ment, more than 100 wells being completed 
in 1906 in that territory. 

The record of Oklahoma’s production 
shows that in 1900 the output was only 6,472 
barrels. Several wells were drilled in the 
vicinity of Bartlesville from 1901 to 1903, 
the oil coming from what is known as the 
Bartlesville sand, which has proved the most 
prolific in the state. 

Oklahoma’s production in 1903 is reported 
at 138,911 barrels, while in 1904 it increased 
to 1,366,748 barrels. From that time on the 
development was rapid, the 1905 figures 
being 6,466,200 barrels and the 1906 total 18,- 
500,000 barrels. 

The development of the Glenn pool, which 
is near Sapulpa, caused Oklahoma’s pro- 
101 


OIL—NEW MONARCH OF MOTION 


duction to leap to 44,300,149 barrels in 1907. 
The state’s output then increased until the 

1911 figure was 56,069,677 barrels. Then, 
in 1912, there was a slight slump, with the 
output given at 51,852,457 barrels. 

It was late in 1913 that the most sensa¬ 
tional development up to that time in the 
history of the Mid-Continent field began. 
This was the striking of oil in remarkably 
large quantities in the lower Bartlesville sand 
in the Cushing field of Creek county, Okla¬ 
homa. The first wells in this field had been 
drilled to a shallow sand in this territory in 

1912 by C. B. Shaffer. Their production 
dwindled rapidly, however, until operators 
were on the point of abandoning a territory 
that proved to be underlaid by the richest 
reservoir of high-grade oil in history. 

From a total production of about 25,000 
barrels in the month of December, 1913, the 
output of the Cushing field, which recorded 
“gusher” after “gusher,” increased in a 
dozen months to more than 300,000 barrels 
daily. The effect of this development is 
shown by Oklahoma’s production figures. 
The state’s total in 1913 was 63,579,071 bar¬ 
rels. The total in 1914 was increased to 
102 



Flaming Oil Tank, Mid-Continent Field 





































































































MID-CONTINENT FIELD 


97,631,724 barrels, while 1915 recorded a 
marketed output of 97,915,243 barrels. 

Oklahoma’s production in 1915, despite 
the low price of oil resulting from the Cushing 
“flood,” was valued at $56,706,133. Produc¬ 
tion at Cushing fell off in 1916, but, despite 
that fact, Oklahoma’s output reached the 
record figure of 107,071,715 barrels. The 
value was $128,463,805, or more than twice 
the 1915 figure. 

Oklahoma and Kansas together in 1917 
produced 155,043,596 barrels, while the out¬ 
put in 1918 was estimated at 139,600,000 bar¬ 
rels—as against the nation’s total of 345,500,- 
000 barrels! And prices;were much higher in 
those years than in either 1915 or 1916. 

The famous Cushing pool is about 35 miles 
west of Tulsa, the oil capital of the Mid- 
Continent field, and extends southward for 
a distance of some dozen to fifteen miles. 
Roughly the town of Oilton marks its north¬ 
ern limits, while Shamrock is near the south¬ 
ern extremity. Its production in the spring 
of 1919 was slightly more than 40,000 barrels 
a day/ 

The greatest of Cushing’s “gushers came 
in with a production estimated at approx- 
103 


OIL—NEW MONARCH OF MOTION 


imately 20,000 barrels a day. Wells of 2,000 
to 5,000 barrels were frequent at the height 
of the development, a well with an output of 
2,000 barrels daily being characterized as 
“just an ordinary producer.” The 20,000- 
barrel well produced from the Tucker sand, 
which lies below the Bartlesville. There are 
five known productive sands underlying the 
Cushing territory. 

At some points in the field, where small 
leases prevail, the derricks crowd each other 
most uncomfortably. Small leases and the 
resultant necessity for hasty drilling to pre¬ 
vent draining of territory by a neighboring 
well were the cause of the disastrously rapid 
development of the district. The flood of oil 
drove prices down temporarily to as low as 
40c. a barrel. Thousands upon thousands of 
barrels of oil also were wasted because of a 
lack of pipe line and storage facilities. 

The Cushing field lies in a rock and hilly 
territory, the surface being a red, sandy clay 
that is common in northern Oklahoma. 
Scrub oak is the prevailing timber, prac¬ 
tically the entire territory being thus tim¬ 
bered. There is plenty of surface rock. In 

fact the country was not at all highly re- 
104 


M I D-CONTINENT FIELD 


garded before oil was found to underlie it. 
Which explains in a measure why it was 
allotted to the Creek Indians, some of whom 
now have royalty incomes that are so large 
almost to prove embarrassing. 

In fact Jackson Barnett, a Creek “incom¬ 
petent” who, in 1919, was 65 years old, late 
in 1917 had some $800,000 on deposit in 
various banks and was enjoying an income 
running into six figures annually. This in¬ 
formation became known through Barnett’s 
guardian, who sought official permission to 
invest a large portion of his charge’s wealth in 
Liberty Bonds. 

Barnett, who was the son of a Creek Chief, 
formerly lived the life of a recluse, spending 
his time hunting and fishing, persistently 
avoiding contact with white men. When 
Indian territory became Oklahoma and lands 
were allotted to members of the Five Civilized 
Tribes of Eastern Oklahoma, Barnett proved 
obstreperous. He didn’t want any land—all 
he wanted was to be permitted to hunt and 
fish and smoke, unrestrictedly. 

Finally the Government arbitrarily gave 
him a piece of land in what later proved to be 
the Cushing oil field. Barnett did not live 
105 


OIL—NEW MONARCH OF MOTION 


on the land, and even when oil in great quan¬ 
tities was gushing forth from his allotment 
he did not manifest any interest The De¬ 
partment of the Interior had attended to the 
leasing of the land to an oil company. 

At first Barnett refused to accept more 
than a small amount of his income. All he 
desired was sufficient money to purchase pro¬ 
visions, tobacco and other supplies, a large 
part of which he frequently distributed among 
other members of his tribe less fortunately 
situated. It is said that his monthly ex¬ 
penses seldom exceeded $50, while his income 
in 1917 was running close to $50,000 monthly. 

The superintendent of the Five Civilized 
Tribes offered to have a cabin constructed for 
Barnett, but he preferred his tepee. Finally, 
the cabin was built and, although Barnett 
accepted it, he insisted on sleeping on the 
porch both in summer and winter. Later, 
because of Barnett’s actions, it was deemed 
advisable to appoint a guardian to protect 
his interests. Gradually he took on the 
ways of civilization, and got to the point 
where he made use of his blanket only for 
sleeping purposes. 

But Barnett never became entirely inured 
106 


MID-CONTINENT FIELD 


to the ways of civilization. An automobile 
was purchased for him, but he exchanged it 
for a flea-bitten pony valued at not more 
than $50. Since he was determined not to use 
a mechanical conveyance, his guardians de¬ 
cided Barnett at least should have a good 
riding horse. The horse was obtained, but it 
went the way of the automobile, Jackson pro¬ 
testing that it put his saddle too far from the 
ground—his choice continues to be a pony. 

On the Barnett lease, in addition to many 
oil wells, is a casing head gasoline plant that 
is one of the largest in the world. As oil wells 
attain age the pressure of the casing head gas 
decreases, but the gasoline content increases. 
The wells in the Cushing pool have attained 
sufficient age and richness of gas to make the 
casing head gasoline industry a close rival in 
importance to the production of crude oil. 

One of the tragedies of the history of Cush¬ 
ing is the fact that literally billions of cubic 
feet of gas were wasted in the early days of 
the field’s development. The realization of 
the value of the product now is causing prac¬ 
tically all of the gas to be utilized, first for the 
production of gasoline and then for fuel. 

Cushing saw its greatest year from the 
107 


OIL—NEW MONARCH OF MOTION 


standpoint of production in 1914 and 1915. 
The greatest monthly output was in April, 
1915, when the district yielded 8,658,000 bar¬ 
rels of high-grade petroleum. The pool’s 
total for 1915 was 70,699,854 barrels. 

The great flood of oil had an adverse effect 
on the price of petroleum, the price of Okla¬ 
homa crude oil dropping within a period of 
22 days from $1.05 a barrel to 75c. a barrel, 
and the series of declines which followed in 
rapid succession sent the price down to a 
low level of 40c. a barrel in September, 
1915. 

Students of the situation, however, assert 
that over production was not altogether re¬ 
sponsible for the low figure to which the price 
of crude oil dropped. They partially blame 
the general state of hesitancy brought about 
just at the critical moment by the outbreak 
of the war. 

Toward the end of 1915 the situation had 
so adjusted itself that the price of Mid-Con¬ 
tinent crude had advanced to $1.20 a barrel. 
And by the early summer of 1916 the quota¬ 
tion was $1.55 a barrel. It reached $2.25 a 
barrel in 1918 and was still at that figure 
early in 1919, liberal premiums over the mar- 


MID-CONTINENT FIELD 


ket quotation being paid for Cushing crude 
because of its high gasoline content. 

The United States Geological Survey placed 
Kansas definitely in the producing list in 
1889, with an output of 500 barrels. Okla¬ 
homa, according to the same authority, be¬ 
came a producer in 1891, with an output of 
30 barrels. Kansas by 1896 had increased 
its production to 113,571 barrels, while Okla¬ 
homa in that year had an output of only 170 
barrels. 

In 1897 the output of Kansas was 81,098 
barrels and that of Oklahoma only 625 bar¬ 
rels. Gradually both states increased their 
output until in 1904 Kansas produced 4,250,- 
779 barrels and Oklahoma 1,366,748 barrels. 
In the following two years the Geological 
Survey kept the production of the two states 
in the same total, the 1905 output being given 
at 12,013,495 barrels and that of 1906 being 
put at 21,718,648 barrels. 

The next year the figures were kept sepa¬ 
rately and they showed that Oklahoma pro¬ 
duced 43,524,128 barrels, as against 2,409,521 
barrels for Kansas. Gradually from that 
time on, Oklahoma increased her output, but 
after 1907 Kansas did not pass the 2,000,000- 
109 


OIL—NEW MONARCH OF MOTION 


barrel mark again until 1913, when her 
production was 2,375,029 barrels. The Kan¬ 
sas output in 1914 was 3,103,585 barrels— 
that year being followed by a decline in 1915 
to 2,823,487 barrels. 

Then prolific territory in Butler county 
began to be opened and the Kansas output 
climbed rapidly. The output in 1916 was 
8,738,000 barrels. The 1917 year was the 
greatest in the state’s history, the great wells 
completed in Butler county pushing the 
year’s total to upward of 55,000,000 barrels 

There was a sharp falling off in both Okla¬ 
homa and Kansas in 1918 as is shown by the 
decrease in the output of the two states from 
155,043,596 barrels in 1917 to 139,600,000 
barrels in 1918. 

The principal oil-producing sections of 
Oklahoma follow: Washington county—Bar¬ 
tlesville, Hogshooter and Copan-Wann; No- 
wata-Rogers district—Nowata-Rogers, Del¬ 
aware, Chelsea and Inola; Osage county; 
Tulsa county—Bird creek, Lost City, Red 
Fork, Sand Springs, Broken Arrow, Jenks, 
Bixby and Leonard; Okmulgee county— 
Mounds, Beggs, Youngstown, Hamilton 
Switch, Tiger Flats, Morris, Bald Hill, 
no 


MID-CONTINENT FIELD 


Schulter and Henryetta; Muskogee and 
Wagoner—Coweta, Haskell, Stone Bluff, 
Boynton, Cole and Muskogee; Pawnee 
county—Cleveland; Creek county—Cushing 
and Shamrock, Glenn Pool, Sapulpa, Kiefer, 
Kellyville, Bristow, Mannford and Olive; 
Payne county—Yale and Quay; Kay county 
—Blackwell, Ponca city, Mervine and New¬ 
kirk; Garfield and Noble counties—Billings 
and Garber; Carter county—Healdton and 
Fox; Cotton county—Duncan and Lawton. 

It is stated that the number of producing 
oil wells in Oklahoma on July 1 , 1918, was 
42,321. 

In Butler county, the principal source of 
the Kansas output, are the El Dorado, Au¬ 
gusta and Towanda pools. It was the 
Towanda territory that in 1917 produced a 
well with initial flow placed as high as 20,000 
barrels daily. Production also has been devel¬ 
oped in less important degree in other parts 
of the state, one of the small pools being at 
Wellsville, in Johnson county. 

Louisiana first is listed in the Geological 
Survey records as a producer in 1902, the 
year after the Lucas discovery at Spindletop, 
with 548,617 barrels. As the northern part 
ill 


OIL—NEW MONARCH OF MOTION 


of the state is classified as in the Mid-Con¬ 
tinent field and the southern lies in the Gulf 
Coast it is difficult to differentiate as to pro¬ 
duction between the two grades of oil. The 
state’s output had grown to 2,958,958 barrels 
in 1904 and jumped to 8,910,416 barrels in 
1905. 

The principal Louisiana districts are the 
Caddo, Vinton, De Soto, Pine Island and 
Homer fields, the latter two being develop¬ 
ments of 1917, 1918 and 1919. The Vinton 
field was opened in 1911 and the De Soto field 
in 1913. The state is credited with a pro¬ 
duction in 1913 of 12,498,828 barrels, while 
the output in 1914 was 14,309,435 barrels. 
The fields of Northern Louisiana alone are 
credited in 1917 with an output of 8,561,963 
barrels, which was increased in 1918, as a 
result of the developments above mentioned, 
to an estimated total of 13,000,000 barrels. 

The oils found in the Gulf Coast section of 
the state are heavy and asphaltic, while those 
found in North Louisiana are of a very much 
higher grade, ranging in gravity from around 
30° to upward of 40°. 

North Central Texas, with an immensity 
of development under way early in 1919 that 
112 


M I D-CONTINENT FIELD 


overshadowed any other oil activity in the 
world, began to attract real attention with 
the completion of a well in a deep sand near 
Ranger in Eastland county with an initial 
flow of 1800 barrels a day in October, 1917. 
This started such a frenzy of work that by the 
end of 1918 drilling operations had extended 
over an area one-half as large as the New Eng¬ 
land states. 

Oil had been found previously in the Gulf 
Coast section of Texas and in limited quan¬ 
tities in parts of the state in close proximity 
to the new development. In fact the first oil 
development in Texas was in the sixties, when 
a small production was found at a depth of 
100 feet near Nacogdoches. 

Oil was found at a depth of 230 feet at 
Goose Creek in 1893. In the following year 
oil was found near Corsicana, which district 
in 1896 produced about 1,000 barrels. The 
state’s output in 1897 was almost 60,000 bar¬ 
rels and the next year 546,000 barrels. 

The Lucas discovery caused heavy opera¬ 
tions in the Coastal section, the 1901 pro¬ 
duction being 4,393,658 barrels, which was 
increased in 1902 to 18,083,658 barrels. This 

development continued until a production of 
113 


OIL—NEW MONARCH OF MOTION 


28,136,189 barrels was credited to Texas in 
1905. Thereafter there was a gradual falling 
off until the output in 1910 was 8,899,266 
barrels. 

Then followed an upward climb in output 
as a result of the discovery at shallow depths 
of high-grade oil in the central and north 
central portions of the state. Principal 
among these fields are Electra and Burk- 
burnett in Wichita county, the latter of which 
underwent sensational new development in 
1918. A field also was developed at Moran in 
Shackelford county in 1913. Other small 
fields also were opened. 

The state’s total production in 1913 was 
15,009,478 barrels, while the output in 1914 
aggregated 20,068,184 barrels. 

Central and North Texas alone were cred¬ 
ited in 1916 with more than 9,000,000 bar¬ 
rels. The 1917 total was 10,900,646, while 
the beginning of the Ranger development 
boosted the estimated total of this territory 
in 1918 to 15,000,000 barrels. 


114 


VII 


RANGER AND NORTH CENTRAL 
TEXAS 

“Momentous developments that affected 
the future supply of high-grade petroleum in 
the United States/’ says a bulletin issued by 
the U. S. Geological Survey early in 1919, 
“took place in 1918 in the Central and North 
Texas field, after petroleum had been dis¬ 
covered in considerable quantities near Ran¬ 
ger, Eastland county; near Caddo in Ste¬ 
phens county; near Brown wood, in Brown 
county; and near Burkett, in Coleman county 
in 1917.” The campaign of drilling, it was 
added, “extended over 40 counties in north¬ 
ern Texas before the end of 1918 and will 
doubtless result in the opening of other pools 
of high-grade oil in 1919.” 

The daily production of the territory early 
in March, 1919, was estimated to be running 
at the rate of approximately 50,000,000 bar¬ 
rels annually—with the development just 
beginning to gain momentum. 

It was stated that at the end of 1918, twelve 

115 


OIL—NEW MONARCH OF MOTION 


counties in the new territory were credited 
with production of oil or gas, and seven coun¬ 
ties in the list possessed oil wells with produc¬ 
tion ranging from 100 to 6,000 barrels a day 
each. New counties were being added to the 
producing column constantly. 

In the late winter of 1918-19 there were 
completed in the field two wells that estab¬ 
lished new production records, one being 
credited with an initial flow of more than 
12,000 barrels daily and the other almost 
15,000 barrels a day. These wells were in 
Stephens county. 

It was in August, 1918, that Burkburnett, 
in Wichita county, started on a career that 
soon placed it in the ranks of large producers. 
This resulted from the discovery of new pro¬ 
ducing territory in and adjacent to the town 
of Burkburnett. 

The development program in the new ter¬ 
ritory is on a more gigantic scale than was 
ever outlined for any oil field. The spur of 
war-time need also was behind the develop¬ 
ment at its inception. There were com¬ 
pleted in North Central Texas in 1918 a 
total of 1,188 wells with initial production of 

almost 150,000 barrels a day as against 1,020, 
116 


Town of Burrburnett, Texas 
Spring of 1919 


































































r , — - * 












RANGER & NORTH CENTRAL TEXAS 


with initial output of 50,000 barrels a day 
in 1917. 

North Central Texas in the winter of 
1918 and, with growing force, in the spring 
and summer of 1919, leaped into a place of 
such importance in the oil industry as two 
years before would have made the most fan¬ 
tastic dreamer stand aghast. The boom 
which meant the salvation of the oil supply 
for a number of years yet to be determined 
centered at the town of Ranger in Eastland 
county, Texas. 

The first well was drilled in October, 1917. 
Quickly the producing area spread into 
Stephens, Comanche and other counties—in 
fact in the early summer of 1919 it was esti¬ 
mated that drilling was in progress in 120 
counties. 

Oil authorities have asserted that the 
Ranger development safeguards the country’s 
supply of high-grade petroleum for perhaps 
20 years. They also assert that its daily 
production may advance to 300,000 or even 
400,000 barrels daily. 

Eastland, Cisco, Caddo, Breckenridge and 
other towns which theretofore had merely 
been centers of moderately—very moderately 
117 


OIL—NEW MONARCH OF MOTION 


—prosperous farming and cattle raising com¬ 
munities suddenly became seething centers 
of oil development and speculation. Ranger, 
which, when the first well was completed a 
few miles west, was a village of considerably 
less than 1,000 inhabitants, sprang mush¬ 
room-like to a population by the spring of 
1919 of 20,000 to 25,000. Through its mud- 
clogged streets daily passed hundreds of 
wagons and motor trucks hauling casing, der¬ 
rick timbers and other oil-well equipment. 

The frenzy of quick fortune-making spread 
all over that section of the country. Fort 
Worth became wild with it. So did Dallas in 
only a slightly lesser degree. 

A casual traveller could find no sleeping 
accommodations within a radius of more than 
100 miles from the fields unless he was excep¬ 
tionally fortunate. It became a common 
practice for men to have headquarters a 
night’s ride from the development, thereby 
using sleeping cars instead of hotels and 
spending alternate days in the oil fields. 

The Ranger development is what in the 
language of the oil man is called “a big com¬ 
pany proposition.” The oil sands are found 
at depths varying from 2,800 to more than 
118 


RANGER & NORTH CENTRAL TEXAS 


3,500 feet. Scarcity of water, difficulty in 
obtaining labor and material, coupled with 
the depth of the oil sands, made drilling ex¬ 
ceedingly expensive, $50,000 being regarded 
as a moderate cost for a well. 

Naturally a company with limited capital 
and its first well a “dry hole” often was in an 
embarrassing position. It was for this reason 
that the development of the field was carried 
out principally by the larger companies. 

This “big company” idea also applied to 
lease holdings, which were larger than in the 
ordinary field. Large holdings reduce the 
number of possible offset wells, and thereby 
tend to prevent unreasonable haste in devel¬ 
opment work, with its consequent crude oil 
price slumps—as witness Cushing. 

It was an entirely different situation at 
Burkburnett, however. This is a pool in 
Wichita county of limited area and with oil 
found at moderate depth. This development, 
coming at the same time as the great Ranger 
activity, was far more riotous than Ranger. 

A large portion of the pool proved to be 
directly under the town of Burkburnett. 
This led to what is called “town lot” devel¬ 
opment. Each building lot in the town be¬ 
nd 


OIL—NEW MONARCH OF MOTION 


came an oil lease. Derricks crowded each 
other as well as the dwelling houses of Burk- 
burnett. Householders received unheard of 
amounts for the privilege of drilling in their 
front or back yards. 

Burkburnett, which was known (because 
of the low cost of drilling) as a “poor man’s” 
field, became the center of operations for a 
host of small companies, although the devel¬ 
opment was not comparable in eventual im¬ 
portance with the Ranger territory. 

The production of the three counties of 
Eastland, Stephens and Comanche early in 
April, 1919, was close to 100,000 barrels a 
day, while that of the Burkburnett territory 
was slightly more than half that figure. 

It was generally predicted that the three 
other counties mentioned shortly would be 
producing 125,000 to 150,000 barrels daily— 
and these were only the original three of the 
many counties that at that time gave promise 
of figuring successfully in the development. 
Burkburnett, as a result of the opening of 
new productive territory, was producing 
58,000 barrels daily early in May, 1919. 

A company capitalized at $60,000 com¬ 
pleted a 3000-barrel well on a 60-acre lease 
120 



North Central Texas 
Scene of great 1919 boom 









































Jj : 














- •« .- 4 « 








F.i4v* '' ■' ✓ . 























’*■ * ” r ^ 

■ 

. « f ‘ •* '■”**■'V 

. I 

4 










r.< *». .• « * * 






V 






•• • ’ ... •' ■ ; • 







f 




- . - 








- - - 




























RANGER & NORTH CENTRAL TEXAS 

in this new section of the Burkburnett pool 
early in May and immediately afterward 
sold the lease for $2,000,000. This is only 
one instance to show what the field meant 
in new wealth. 

Pipe lines into the field in the early summer 
of 1919 were capable of handling 100,000 bar¬ 
rels a day, with other lines under construc¬ 
tion. Many oil men predicted a potential 
production for the district of as high as 
300,000 barrels a day, from a geographic area 
250 or 300 miles in length and 150 to 200 miles 
wide. These estimates, of course, await the 
future for confirmation. 

At any rate the Ranger discovery proved 
the country’s petroleum savior—and indi¬ 
cates the possibilities of future “finds” as 
the economic situation provides the oil 
pioneer or “wildcatter” with the necessary 
incentive for exploration. 

Texas as it grew in importance as an oil 
producer, also began to take a higher rank in 
the refining end of the business. It was esti¬ 
mated in the early summer of 1919 that more 
than 40 refineries were under construction or 
projected in Northern Texas. 

The oil spread its gold in many places— 
121 


OIL—NEW MONARCH OF MOTION 


places where it was the more welcome be¬ 
cause it was unexpected. A farmer who was 
living in Fort Worth after oil was found on 
his land, complained that the worry of it kept 
him from getting much-needed sleep. He had 
been in the drouth-stricken area and in the 
farming days $15 or $20 was a large amount 
of cash to have on hand. The transforma¬ 
tion from that to $7,000 monthly was almost 
too much for him to bear up under. 

A bootblack in Fort Worth is reported to 
have invested his surplus savings with some 
experienced oil men. The result was that 
early in 1919 he was receiving $3,000 monthly 
—in addition to the profits from his shoe- 
shining business. 

Companies as well as individuals that in¬ 
vested wisely in this as well as other fields 
are taking immense profits out of the Texas 
fields. Not all have been successful—but 
not all have chosen wisely their lands, or the 
men with whom they invested their money. 
For, the state of Utopia still being appa¬ 
rently some distance away, a new oil field 
proves alluring to the crooked promoter, 
“lease grafter” and faker just the same as it 

does to an honest investor. 

122 


RANGER & NORTH CENTRAL TEXAS 


“Possibly no field in this country,” says 
the Oil City Derrick of January 21,1919, “ has 
been developed with as small a loss in oil. 
This was due largely to the great care exer¬ 
cised by the big companies in not drilling a 
well into production until some storage or 
carrying capacity had been provided to care 
for the oil. 

“According to estimates placed on the land 
holdings of Eastland and Stephens counties 
from the discovery of oil, they have a value 
to-day in excess of 10% of the total taxable 
property in the state. 

“In Eastland county there are about 770,- 
000 acres, on which a fair average lease mar¬ 
ket value would be $150 an acre and accord¬ 
ing to prices at which royalty values are sell¬ 
ing, a fair average lease market value would 
be $150 an acre, making a total of $300 an 
acre on the 770,000 acres, or $231,000,000. 

“In Stephens county there are about 550,- 
000 acres on which an average market value 
for leases might be conservatively placed at 
$100 an acre and on the royalty at $100 an 
acre, or a total of $200 an acre. On 550,000 
acres it will figure $110,000,000, making a 
total of $341,000,000 for Eastland and Ste- 

123 


OIL—NEW MONARCH OF MOTION 


phens counties in increased market value over 
and above the values before oil was discovered 
less than 15 months ago.” 

It was estimated in 1919 that about 80% 
of the wells drilled in the Ranger field 
had proved productive—truly a remarkable 
record for a new field, where the great propor¬ 
tion of operations is in unproved territory. 

In the original Ranger pool (Eastland 
county), according to the Lamp, published 
by the Standard Oil Company of New Jersey, 
there had been drilled up to May, 1919, a 
total of 214 wells, of which 42 were dry. 
Some of these wells “came in” with produc¬ 
tion of less than ten barrels a day; others 
produced 5,000 to 12,000 barrels. Average 
initial production was computed at the high 
figure of 839 barrels a day to each well, while 
average production in May, 1919, was placed 
at 407 barrels daily. 

Ranger apparently means doubling the 
profit and glory already achieved by the Mid- 
Continent field, which, in 1918, was respon¬ 
sible for 42% of the nation’s oil output. 


124 


VIII 


LEASING AND DRILLING 

Properly conducted, there is not the 
hazard in the oil business that is popularly 
attributed to it. In fact, it is doubtful if any 
other class of business ventures could show 
such a high percentage of successes. 

In the new Ranger district of Texas, whose 
boundaries have not yet been defined, the 
drilling in 1919 was estimated to be about 
80% successful. 

One company that in 1918 drilled 52 wells 
in various Oklahoma districts reported that 
43 were productive either of oil or gas, while 
nine were “dry.” This shows that approx¬ 
imately 83% of the wells proved paying 
propositions. 

The selection of lands on which to drill may 
spell either success or disaster for the em¬ 
bryonic oil-producing company. For, in some 
districts, such as North Texas and Wyoming, 
the cost of drilling a single well to the deep 
sands ranges (on a basis of 1918 labor and 
material prices) from $40,000 to $75,000. 

125 


OIL—NEW MONARCH OF MOTION 


The completing of a “dry hole” or “duster” 
at the start of a company’s operations, unless 
the organization be amply financed, naturally 
proves a serious set-back. Hence the oil 
scout and geologist. 

Before the leasing department of an oil 
company begins the work of taking up leases 
it is essential that the geologists have made a 
favorable report on the acreage in prospect. 
Then, after the leases have been obtained 
and before drilling is started, a careful inves¬ 
tigation of titles must be made, and again 
the geologists must indicate the most fav¬ 
orable locations on which to drill. Prox¬ 
imity to marketing facilities is important. 
A producing oil well is not a particularly 
valuable asset unless the output can be sold. 

The scouting department’s duty is to supply 
logs of wells previously drilled in that terri¬ 
tory, giving the formations encountered in 
wells drilled by other companies in adjoining 
districts. These logs indicate where water 
may be encountered, where the gas strata 
lie and where the producing oil sands may be 
found. The scout also gives information 
upon which the kind and size of casing and 
other drilling equipment is decided. 

126 


LEASING AND DRILLING 


There is a standard lease form in the 
various districts, the oil company usually 
agreeing to give the owner of the land a 
royalty of one-eighth of the oil produced. 
In some cases, where acreage is in great de¬ 
mand, a higher royalty is paid. On the 
Osage Indian lands in Oklahoma a one-sixth 
royalty is paid. 

Where the land is in an unproven or “wild¬ 
cat” territory the oil company may obtain the 
lease for a nominal consideration, with rental 
payments of a few cents an acre a year to be 
paid until such time as the lease becomes pro¬ 
ductive. In most cases the terms of the lease 
call for the starting of the initial well within a 
specified period after the signing of the agree¬ 
ment. 

In producing territories large bonuses fre¬ 
quently are paid for leases. Depending upon 
the regard in which the acreage happens to be 
held, the bonuses may range from a few dol¬ 
lars to $5,000 or even more an acre. In the 
Spindletop boom of 1901 quarter-acre tracts 
in the proven area are reported to have sold 
for $50,000 to $100,000. 

When the oil producer, upon the advice of 
his geologist, has decided on the location of a 
127 


OIL—NEW MONARCH OF MOTION 


well, the first step is to get the drilling equip¬ 
ment on the lease. Probably this is done by 
the producer himself, or he may have the 
work done by a drilling contractor. Arrange¬ 
ment must be made for a supply of water for 
the boilers; or, if it be in a territory where 
drilling is by the rotary system, also to keep 
a column of water constantly in the hole. A 
derrick must be erected, a power plant pro¬ 
vided, cables, drilling tools, casings and other 
materials provided. 

Although local conditions frequently neces¬ 
sitate modifications, there are in use in the 
United States two general systems for 
drilling oil or gas wells. They are the 
standard or churn-drill system, and the 
rotary method. 

The standard system sometimes is called 
the “percussion” or “American cable sys¬ 
tem,” and consists in its essentials of a heavy 
steel bit attached to a rope or wire cable 
(usually rope), which is raised and dropped 
by means of a walking beam extending over 
the hole. This system is adapted to drilling 
in hard formations which permit the side of 
the hole to remain intact until it is advisable 
to insert a casing because of encountering a 
128 


LEASING AND DRILLING 


water or gas-bearing stratum. This is the 
drilling method used as a rule in the eastern 
and Mid-Continent fields—in fact all the 
fields of the United States except the Gulf 
Coast and some parts of California. 

The system is adapted also to use in some¬ 
what softer formations than are encountered 
in these fields, by the use of what is called an 
“under-reamer.” In such formations the 
tools are followed up by the strings of casings 
closely enough that the side of the hole does 
not cave and prevent the tools from being 
withdrawn. 

When a well is started, it is necessary to 
make a hole of a certain depth before it is 
possible to insert the drilling tools and inau¬ 
gurate the regular drilling procedure. Some¬ 
times a hole is dug ten or fifteen feet to bed¬ 
rock. Where the bedrock formation is too 
deep to permit digging, an iron “drive-pipe,” 
with a sharp steel shoe at the lower end, is 
driven down. 

Where it is less than about 60 feet from the 
surface to the rock formation, the “ spudding ” 
process is resorted to in order to give suf¬ 
ficient depth to the hole to permit drilling 

in the usual manner. In this process, the 
129 


OIL—NEW MONARCH OF MOTION 

drilling tools are raised and dropped by tight¬ 
ening and then slacking the cable, a jerk 
rope” held by the driller and the axle of the 
bull wheel usually being the instruments to 
accomplish these results. 

One end of the drilling cable is attached to 
the bull wheel, on which it is spooled. The 
cable is passed over the crown pulley on top 
of the derrick; from there down through what 
is known as the temper screw, which is fast¬ 
ened to the end of the walking beam, and on 
down into the hole. The temper screw is 
attached to the cable by means of clamps. 
The drilling cable being firmly held by these 
clamps, the drilling is accomplished by the 
raising and lowering of that end of the walk¬ 
ing beam. 

The string of drilling tools consists of a 
socket, jars, drill stem and bit. The tools are 
joined together by means of box and pin con¬ 
nections. At the top of the string of tools is 
what is known as a rope socket, which is used 
to connect the rope or steel cable with the 
rest of the tools. 

The jars, when they are used, usually are 
attached just below the socket. As the name 
would indicate, they are used to jar the tools 
130 


LEASING AND DRILLING 


loose when they become stuck in the forma¬ 
tion being drilled through. 

Next comes the solid drill stem, to the lower 
end of which is attached the bit. The stem 
varies in length and diameter according to the 
requirements of the hole in which drilling is 
being conducted. 

The dressing of the bit varies according to 
the nature of the formation and the ideas of 
the driller. The bottom edge in some cases is 
beveled, while, in others, it is dressed con¬ 
cave. 

When drilling in clay or other sticky forma¬ 
tions it frequently is the practice to use a 
sinker bar between the jars and the socket. 
The function of a sinker bar is to add weight 
to the blow of the jars in their effort to release 
the bit when it becomes stuck. 

The drilling crew consists ordinarily of a 
driller, a tool dresser and an engineer. It is 
the driller’s duty to rotate the drill by means 
of a short lever inserted in the rings of the 
temper screw. As the drill progresses in 
depth, he lets down the temper-screw at fre¬ 
quent intervals to put a greater length of rope 
in the hole. Likewise, he determines when the 
drill bit needs sharpening, and the hole cleaned. 

131 


OIL—NEW MONARCH OF MOTION 

The bull wheel is called into action to with¬ 
draw the tools from the hole. While the tool 
dresser is removing the bit after the tools have 
been withdrawn from the hole, a bailer or 
sand pump is sent down to clear the bottom 
of the hole for further operations of the drill. 
The pump, or bailer, is sent down into the 
well as many times as is necessary to remove 
the water or sediment from the bottom of the 
hole. A separate line, which passes up over 
a pulley on the crown block, is used to per¬ 
form this operation. After the hole has been 
cleaned the drilling tools again are sent down 
into the well. 

When water or a caving formation is en¬ 
countered, casing is inserted and drilling 
proceeds with a smaller bit. When suc¬ 
ceeding strings of casing for any reason are 
required (the first having been set in some 
hard formation), they, of course, must be of 
smaller diameter than the first in order to be 
passed down into the hole. 

In some districts it is necessary to start 
casing the well very soon after drilling is 
started. On the other hand, in some of the 
eastern territories of the United States, it is 

possible to drill to a depth of 2,000 feet or 
132 


LEASING AND DRILLING 


more without inserting casing, except to 
exclude water before tapping the oil bearing 
sand. The structure in some parts of Mexico 
also is said to permit drilling to a depth of 
about 2,000 feet without inserting casing. 
This is called drilling with an “open hole.” 

It is the general practice to tap the oil 
sands with a well six to eight inches in diam¬ 
eter, four inches being the minimum. At the 
top of the hole the maximum diameter in the 
United States so far as known is 20 inches. 

The rotary drilling outfit, which is more 
costly than the type previously described, 
consists of a drilling stem—usually of six- 
inch pipe—to which is attached the bit or 
cutting tool at the lower end, provided with 
a hole for the circulation of water. These are 
rotated by means of a gear, or turntable, pro¬ 
vided with grips, power for the driving of 
which usually is supplied by a gas or steam 
engine. 

A constant circulation of muddy water 
is maintained by a special pump. This water 
goes down through the inside of the drill 
stem and through the hole in the bit at the 
bottom and comes up the outside of the stem. 
In addition to carrying the pulverized matter 
133 


OIL—NEW MONARCH OF MOTION 


up out of the hole, this constant flow of water 
also serves to keep the bit cool. 

Because of the fact that in some districts 
part of the hole stands up very well, while 
certain other formations in the same hole 
cave badly, it frequently is difficult to deter¬ 
mine whether it is advisable to use the stand¬ 
ard cable system or the rotary system. 

In territories to which each is best adapted, 
the rotary is said to excel a standard rig so 
far as time of drilling is concerned. With 
standard tools it requires about thirty days to 
drill a 2,000-foot hole in Pennsylvania and 
West Virginia, while it requires only from 
fifteen to twenty days to drill a 2,000-foot 
hole in Louisiana with a rotary rig. How¬ 
ever, it requires a crew of from ten to eleven 
men to operate a rotary, as against three or 
four men for a standard rig. 

A dependable supply of water is necessary 
to the operation of a rotary outfit. One of 
the disadvantages of the heavy column of 
water which is used in a rotary hole is that 
small showings of oil or gas sometimes are 
not observed at the top of a hole. For this 
reason, the cable system is declared to be 
better adapted for prospecting work, because 
134 


LEASING AND DRILLING 

of the fact that the dry hole permits the 
operator to determine definitely regarding the 
formations through which the drill is 
passing. 

When a field once has been located and it 
is possible to determine the depth at which 
the oil sand is to be encountered, this fea¬ 
ture does not assume the importance that it 
does in new territory, and it is possible to 
use the rotary machine satisfactorily, if it is 
adapted otherwise for use in that field. 

Although in the past it was the tendency 
to take chances on being able to control the 
flow of the well after it had been drilled in, the 
rule now is to take precautions before the 
drilling-in process against the possibility of 
the well flowing “wild.” 

The drilling tools are removed from the 
hole and what is known as a control casing 
head is put on, a gate valve being attached 
to a long, heavy split-sleeve or collar. The 
two halves of this sleeve are bolted to the 
casing a short distance below the mouth, so 
as not to interfere with the work of completing 
the well, the drill then being inserted and 
operated very cautiously as the oil or gas¬ 
bearing structure is penetrated. 

135 


OIL—NEW MONARCH OF MOTION 


There also are other methods by which the 
valve is so arranged that it does not interfere 
with the passage of the cable during drilling. 
After the tools have been withdrawn it is pos¬ 
sible to swing the valve into place, and thus 
close the well without any delay. 

It sometimes is the case, however, that 
pressure develops in such unexpected volume 
as to require special methods of control. 

The “shooting” of an oil well is not, as 
sometimes is believed, an invariable practice. 
It is resorted to only in hard rock formations, 
or where the oil-producing sand is so densely 
packed or lacking in gas pressure as to refuse 
to release the oil except grudgingly. 

When it is found necessary to shoot, a 
charge of nitroglycerin is exploded in the oil 
sand after the well has been drilled in, but 
before it is put to producing. 

The quantity of nitroglycerin varies, ac¬ 
cording to the conditions, from a few quarts 
to 500, or even 600 quarts. These large shots 
are used in the extremely thick and com¬ 
pact formations of North Texas. 

The explosion shatters the formation, 
thereby enlarging the surface from which the 
oil can filter into the hole, and creating a 
136 


LEASING AND DRILLING 


reservoir in which the oil may collect at the 
bottom of the casing. 

If the well has been drilled into an area con¬ 
taining a small quantity of oil in close prox¬ 
imity to a more porous body of sand which 
contains oil in larger quantities, the shock of 
the explosion may open up a connection with 
a better reservoir. Cases have been known 
in which production has been obtained after 
“shooting” a well that apparently was dry 
when drilled into the oil sand. 

Also in some fields “shooting” has re¬ 
sulted in production from shallow sands that, 
in the early history of the fields, were re¬ 
garded as too insignificant for production. 
This practice is coming into vogue in Okla¬ 
homa, and a great deal of production now is 
being obtained from sands that when the 
drill first went through them were regarded as 
of no importance. 

The practice of “shooting” a well also fre¬ 
quently is resorted to when production has 
fallen off to a point where the well no longer 
is a paying proposition. “Shooting” in such 
a case frequently results in considerable 
stimulation of output. 

The “shooting” is accomplished by lower- 
137 


OIL—NEW MONARCH OF MOTION 


ing one at a time nitroglycerin canisters 
to 5 inches in diameter and up to about 10 
feet in length. After the required number of 
canisters have been lowered to the bottom of 
the well, what is known as a “jack-squib” is 
dropped into the hole to explode the nitro¬ 
glycerin. This contrivance bears a fuse 
which is lighted before it is dropped. 

Some oil wells have sufficient gas pressure 
to produce by natural flow for a considerable 
time after their completion. When this gas 
pressure dwindles to such an extent that it no 
longer forces the oil up out of the casing, it is 
necessary to install a pump. In the older 
fields it frequently is necessary to install a 
pump before any production is obtained from 
a new well, or else very soon after the well’s 
completion. 

The oil driller’s task is one which requires 
a great deal of ingenuity, because of the 
numerous problems with which he must cope. 
Now and then a cable breaks, and it is neces¬ 
sary to “fish” for the tools, or it may be 
necessary to “under-ream.” In fact, the 
difficulties that a driller may encounter are 
innumerable. 

Despite the expense involved and the dif- 

138 


LEASING AND DRILLING 


ficulty of the task, there is a relatively small 
percentage of failures in the drilling of oil 
wells in proven territory. In the Mid-Con¬ 
tinent fields, for instance, it is asserted that 
only 10 to 15 per cent of the wells drilled are 
failures; while figures for Oklahoma show that 
nearly 90 per cent out of a total of 23,000 were 
successful. 


i 


139 


IX 


REFINING OF PETROLEUM 

When the crude oil gushes or is pumped 
from the wells it is still a far cry to gasoline, 
sewing-machine oil, asphalt roofing or medi¬ 
cinal salve. It must be transported first to 
the refineries by pipe line or tank car and 
there started on the process of disintegra¬ 
tion, which, if it is carried out to the limit of 
science and ingenuity, may result in hun¬ 
dreds of different products. 

The genesis of the refining industry in the 
United States is attributed to Samuel M. 
Kier of Pittsburgh, Pa., who in the late 
forties erected a small still which produced 
illuminating oil from the petroleum pro¬ 
duced by the salt water wells at Tarentum, 
Pa. This must have been at least ten years 
before the bringing in of the Drake well, 
which is declared to have been the first well 
drilled for the express purpose of obtaining 
petroleum. 

Mr. Kier previously had marketed petro- 
140 


REFINING OF PETROLEUM 


leum obtained from the salt wells as a medi¬ 
cine. Its value as an illuminant, however, 
also had been recognized, although in its 
crude state it was far from an ideal sub¬ 
stance for that purpose. 

With the idea in view of obtaining a satis¬ 
factory lamp oil from petroleum, he sub¬ 
mitted some of the crude oil to a chemist for 
analysis. The chemist reported that certain 
constituents of the oil would make an excel¬ 
lent illuminant. However, he made no sug¬ 
gestion regarding a possible plan for obtain¬ 
ing it from the crude petroleum. 

Mr. Kier then set to work on the problem 
and built a still, the original having had a 
capacity of one barrel, or 42 gallons, of crude 
oil. Combined with his task of evolving a new 
illuminating material was the necessity of 
developing a lamp in which it could be 
burned satisfactorily. 

Experimenting at the same time with the 
oil, which be called “carbon oil,” and with 
lamps he finally succeeded in refining and 
clarifying the oil so that it made a steady, 
clear and clean illuminant. The objection 
to petroleum as an illuminant in its crude 
state had been that its odor was offensive 
141 


OIL—NEW MONARCH OF MOTION 


and combustion resulted in considerable 
smoke. 

Mr. Kier’s next still had a capacity of five 
barrels of crude oil. The illuminating oil 
that was produced met with a ready sale at 
$1.50 a gallon. The purifying process for 
lamp oil was improved later by the use of 
acids. Mr. Kier, not having obtained a 
patent on his process, was not able to con¬ 
tinue his monopoly after the bringing in of 
the Drake well. The five-barrel still used 
by Mr. Kier is reported to be preserved by 
his descendants at Salina, Pa. 

Shortly after Mr. Kier began to refine 
petroleum and before his product had ob¬ 
tained more than local distribution, several 
refineries sprang up in the East for the dis¬ 
tilling of combustible oil from shale and from 
coal. The development of the petroleum in¬ 
dustry beginning with the Drake well, how¬ 
ever, put an end to this branch of the business 
for more than a half-century. Just now, 
however, oil shale is beginning again to 
attract attention as a future source of petro¬ 
leum. 

An indication of the rapid increase in the 
consumption of refined oil is conveyed by the 
142 


REFINING OF PETROLEUM 


fact that in March, 1863, the daily produc¬ 
tion of refined oils in the United States was 
from 1,200 to 1,500 barrels. Daily produc¬ 
tion of crude oil at that time was estimated at 
5,000 barrels. In 1918 the refineries of the 
United States had daily capacity averaging 
1,338,276 barrels and are estimated to have 
handled an average of 894,697 barrels of 
crude oil daily. 

There has been no chartge of principle in 
the refining of oil since distillation was hit 
upon. Methods, however, have been im¬ 
proved and special processes evolved. 

The oil refinery to the layman is a baf¬ 
fling network of buildings, stills, connecting 
pipes, tanks and loading racks. It, however, 
is not such a confusing place after all. The 
object of a refinery is, through various proc¬ 
esses of distillation and purification, to 
separate crude oil into its various products. 
The separation first is into general groups of 
products, which in turn are separated into 
minor groups and products until the market¬ 
ing stage is reached. [/ 

As the various products of petroleum have 
different boiling points, the process of dis¬ 
tillation is the principal one. The oil is 
143 


OIL—NEW MONARCH OF MOTION 


subjected to varying degrees of beat in huge 
stills. Into some of the stills steam is in¬ 
jected to assist in carrying off the oil vapors. 
The vapors are condensed by cooling and the 
different groups of products, by means of an 
intricate system of piping and manifolds, 
are sent to the proper receptacles. 

The refiner knows the boiling points of the 
various groups. When a certain temperature 
is reached the receptacle into which the pre¬ 
vious group has been sent is closed and the 
condensed vapors formed at the higher tem¬ 
perature are piped into another receptacle. 

The fluids as they flow from the condensers 
go through what is known as the “receiving 
house,” where, in passing through glass en¬ 
closed “look boxes,” they are subjected to the 
scrutiny of an expert. 

The usual practice is to take samples each 
hour and test them for specific gravity. In 
this manner the operator is able to determine 
when the fluid ceases to belong to the kero¬ 
sene group and enters the gas oil or other 
classification. 

The first “cut” consists of naphtha, or 
crude gasoline; the second is the kerosene 
group; the third the gas oil, and then the 

144 


Crude Oil Stills 

Each with capacity of 1.200 barrels 













































































































































REFINING OF PETROLEUM 


heavier oils, lubricants and waxes. The 
number and nature of the groups is variable, 
according to the methods of the refiner. 
These various groups overlap somewhat, but 
this is remedied through the redistilling, fil¬ 
tering and other purification processes to 
which each group is subjected in order to 
obtain still greater differentiation of products. 

A process which is coming into greater 
and greater use in refining in order to increase 
the percentage of gasoline obtainable from 
the crude oil is known as “cracking.” This 
involves an entirely different principle from 
ordinary distillation. 

The chief elements in petroleum are car¬ 
bon and hydrogen—80% to perhaps 88% of 
carbon and 10% to 15% of hydrogen. 
Other elements, such as sulphur, nitrogen, 
oxygen and salts also are found in varying 
amounts in some grades of crude oil. They 
usually are looked upon as impurities, In 
fact it was one of the early problems of re¬ 
fining to devise a means of eliminating sul¬ 
phur, which is especially noticeable in Illi¬ 
nois and Gulf Coast oils. 

The various products of crude oil are com¬ 
posed of molecules containing carbon and 
145 


OIL—NEW MONARCH OF MOTION 


hydrogen in different proportions. For in¬ 
stance the molecules that form gasoline con¬ 
tain carbon and hydrogen in different pro¬ 
portions than kerosene or gas oil molecules. 
In ordinary distillation the crude oil sepa¬ 
rates into the various groups and products 
without any change in the molecules. 

“Cracking” is a process of subjecting the 
products of a certain group to extreme heat 
and pressure, thereby breaking up and chang¬ 
ing the nature of the molecules so that they 
contain carbon and hydrogen in new pro¬ 
portions. By means of this process sub¬ 
stantial amounts of gasoline that would not 
be available through ordinary refining proc¬ 
esses are obtained from gas oil or fuel oil. 

Numerous “cracking” processes have been 
evolved, the most widely used being the Bur¬ 
ton process, patented by the Standard Oil 
Company of Indiana and used by numerous 
other companies under royalty arrange¬ 
ments. It is estimated that the Standard 
Oil companies as early as 1916 obtained from 
oils formerly used in artificial gas manufac¬ 
ture or in direct competition with coal some 
5,000,000 barrels of gasoline. 

The percentage of gas oil obtained from 
146 


REFINING OF PETROLEUM 


Mid-Continent crude averages about 20. 
At a price of 4c. a gallon a barrel of this 
product would be worth $1.68, according to a 
refiner who discussed with the writer the 
financial benefit to be derived from 44 crack¬ 
ing” the oil. By “cracking,” he said, about 
32%—or 13 gallons—of 59° gasoline could be 
obtained. At 24c. a gallon this would have a 
market value of $3.12, while the 29 gallons 
of residue at 3c. a gallon would add 87c.— 
a total of $3.99. On this basis the “ cracking” 
of a barrel of gas oil would add $2.31 to its 
market value. 

One of the heaviest sub-groups in the 
refining of oils of a paraffin base is known as 
paraffin distillate. This contains a large 
percentage of paraffin or wax. An intricate 
process of chilling and pressing (which, in 
reality, is filtering) is necessary to separate 
the wax from the lubricating stock. 

Other products are subjected to “settling, 
chemical treatment, washing and filtering to 
remove impurities. 

Crude gasoline, for example, is placed in 
an immense upstanding tank called an 
“agitator.” The bottom of the tank is fun¬ 
nel shaped, with a small opening. The crude 
147 


OIL—NEW MONARCH OF MOTION 


gasoline is run into the tank. Then sul¬ 
phuric acid is added. Air then is forced in 
through pipes that have their outlet near the 
bottom of the tank. This “agitates” the 
contents of the tank violently, thoroughly 
mixing the gasoline and acid. 

Later water is put into the tank from the 
top. It, being heavier than the gasoline, 
passes down through the gasoline, carrying 
most of the acid and the impurities collected 
by the acid, to the bottom of the tank. The 
water and acid then are drained off through 
the opening at the bottom, leaving the gaso¬ 
line in the tank. 

Then, after the gasoline has been washed, 
caustic soda is added in order to neutralize 
whatever acid may remain. Then it again 
is washed and is ready for the market or for 
redistilling. 

Other distillates are washed and treated 
in a similar manner in specially constructed 
“agitators.” One of the substances com¬ 
monly used for filtering is Fuller’s earth, 
which absorbs the impurities as the oil passes 
through. Fuller’s earth also is used in sep¬ 
arating lubricating oil into its various grades. 

Refineries differ greatly as to the extent to 
148 


Each treating 12,000 gallons of gasoline daily 


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REFINING OF PETROLEUM 

which they carry out the separation process. 
Other differences in construction and meth¬ 
ods are made necessary by the different 
nature of the various grades of crude oil. 

The basic substance in the Mexican, Gulf 
Coast, California and some of the Mid-Con¬ 
tinent and Wyoming oils is largely asphalt, 
while paraffin predominates as the basic (or 
heaviest) substance in most of the oils found 
east of the Mississippi river, in the Mid- 
Continent field and in Wyoming. 

The heavy, or asphalt oils, which are rela¬ 
tively deficient in gasoline content, some¬ 
times are used for fuel without refining. In 
other cases merely the lighter distillates are 
removed and the remainder disposed of as fuel 
oil. 

A refinery that removes only the lighter dis¬ 
tillates is called a 44 topping” or 44 skimming” 
plant. There are, however, numerous plants 
that carry the refining of these heavy oils 
down to asphalt and coke. 

In connection with two immense 44 skim¬ 
ming” plants in Wyoming there are operated 
by other companies plants which use one 
of the most efficient of the 44 cracking” proc¬ 
ess. The 44 cracking ” plant owners have long- 
149 


OIL—NEW MONARCH OF MOTION 


term contracts with the “skimming plants” 
for the oil after it has been treated by ordi¬ 
nary refining methods. 

Gasoline content of the different grades of 
crude oil ranges from almost none in some of 
the heavy Mexican oils to 25%, 30% and, 
in some cases, up to above 40% in some of 
the oils found in Northern Wyoming and 
Oklahoma. 

Following are the percentages of the various 
fractions obtained from Pennsylvania grade 
of crude obtained by a certain refining process, 
the different groups being given the names by 
which they are known to refiners: Gasoline, 
25%; turpentine substitute, 15%; kero¬ 
sene, 15%; 300 oil, 15%; non-viscous neu¬ 
tral oil, 12%; viscous neutral oil, 8%; S.R. 
cylinder stock, 8%; refined paraffin wax, 2%; 
There also was a 5% loss in manufacture. 

By the same process Cushing crude yielded 
the following: Gasoline, 30%; turpentine 
substitute, 20%; kerosene, 15%; gas oil, 
15%; viscous neutral oil, 10%; S. R. cyl¬ 
inder stock, 6%; refined paraffin wax, 0.5%; 
asphalt, 3.5%. This oil also showed a 5% 
loss in gallonage in manufacture. 

The “300 oil” and “gas oil” are the same. 

150 


REFINING OF PETROLEUM 

The “turpentine substitute/’ as its name 
implies, is used largely in the mixing of paints. 
The neutral oils and “cylinder stock” frac¬ 
tions embrace lubricating oils of various 
grades. 

The profit of the refiner varies greatly, 
being dependent on the size and efficiency of 
the plant, the extent to which the refining 
process is carried out, location of the plant, 
marketing methods and numerous other 
factors. The elements governing profits are 
so variable that even a rough percentage 
table would be of little or no value. 

A rough basis of price classification used for 
crude oil is based upon specific gravity, which 
is related to amount of the light or more val¬ 
uable constituents. This method, however, 
cannot be relied upon for arriving at the val¬ 
ues of heavy oils whose usefulness is based 
not upon its content of lighter distillates, but 
upon its value as fuel as compared with coal. 
The gravities of crude oils are arrived at by 
means of what is known as the Baum6 scale, 
the temperature of the oil on which the test is 
based being 68° F. 

The heavy oils of California and the Gulf 
Coast fields show specific gravity of 12° to 


OIL—NEW MONARCH OF MOTION 

25° Baum6 (there are, however, some oils 
in California with specific gravity running 
possibly as high as 40°); while the oils of the 
Mid-Continent, Illinois and Appalachian 
fields as a rule show a gravity of 32° to 49°. 
There is a relative scarcity of intermediate oils 
with a gravity of 27 ° to 32 °, as well as those 
of extremely high gravity, such as Pennsyl¬ 
vania crude, with about 44°. 

There were in operation in the United 
States at the end of 1918, according to the 
Bureau of Mines, 267 refineries with daily 
capacity of 1 , 226,175 barrels of crude 
oil. 

The daily average of crude oil run to stills 
in 1918 was 869,618 barrels, as against the 
1917 average of 863,374 barrels. Average 
runs in 1916 were 674,842 barrels daily, with 
about 524,000 barrels in 1914. 

But it is not with crude oil as a working 
basis that millions of gallons of gasoline now 
are being placed on the market each year. 
The precious fluid of an extreme richness is 
being obtained from natural gas—and it 
is here that lie great possibilities in the 
line of conserving the nation’s supply of 
gasoline. 


REFINING OF PETROLEUM 


From this source millions of gallons of gaso¬ 
line are obtained annually that formerly were 
wasted. 

Two methods of extraction are employed, 
depending upon the kind of gas. One is 
the compression and condensation process, 
and the other the absorption process. 

Casing head natural gas is the gas that 
flows from oil wells. It is what is known to 
oil and gas men as “wet gas;” the product 
coming from gas wells being known as “dry 
gas.” Use has been made of casing head gas 
for light and fuel at oil wells almost from the 
beginning of the industry, but it was not 
until a dozen years ago that there began to be 
a realization of its true value. 

It is said that the first extraction of gaso¬ 
line from casing head gas was accomplished 
in 1903. Since that time it has grown— 
slowly at first, but with great rapidity in 
recent years—into an industry of gigantic 
proportions. 

In fact, the United States Geological Sur¬ 
vey places the amount of raw gasoline re¬ 
covered from natural gas in 1917 at 217,844,- 
104 gallons, a gain of 114,391,415 gallons, 
or 111%, over the 1916 output. 

153 


OIL—NEW MONARCH OF MOTION 


Because of its extreme volatility it was 
necessary to mix this raw gasoline with a 
refinery product of lower grade in order to 
obtain commercial gasoline. The quantity 
of commercial gasoline resulting from the raw 
product in 1917 is estimated roughly by the 
Geological Survey at more than 300,000,000 
gallons. 

The volume of natural gas sent through 
the plants to obtain this amount of gaso¬ 
line is estimated at 429,000,000,000 cubic feet, 
and the average recovery of gasoline per 1000 
cubic feet by all methods was about one-half 
gallon. 

The number of plants for extracting gaso¬ 
line from natural gas increased in 1917 from 
596 to 886, a gain of 49%. Combined daily 
capacity of plants increased during the year 
from 495,448 gallons to 902,385 gallons, or 
about 82%. It is evident, therefore, that the 
1918 production also registered an immense 
gain over the preceding year. 

The gasoline content of the various lands 
of natural gas varies widely, the highest 
average in 1917 (the gasoline being extracted 
by compression from gas obtained from oil 
wells by means of vacuum pumps) was 


REFINING OF PETROLEUM 


slightly more than 3 gallons from 1,000 cubic 
feet of gas. This was in Louisiana. 

Oklahoma was the largest producer in 
1917 with 115,123,424 gallons valued at 
$21,541,905. This was more than half of 
the country’s output of natural gas gasoline, 
which had a market value of $40,188,956. 

George A. Burrell, formerly in charge of 
research work in the United States Bureau 
of Mines, draws an analogy between the oc¬ 
currence of gasoline in natural gas and the 
occurrence of water vapor in the air. 

“Natural gas,” writes Mr. Burrell, “is 
the invariable accompaniment of oil. On it 
the pressure in an oil well depends. High 
pressure in the strata forces a large quantity 
of the gas into solution in the oil. Oil wells 
that flow or ‘gush’ do so because there is suf¬ 
ficient gas pressure to raise the oil from the 
sand through the casing of the well and often 
throw it high in the air. When a flowing 
well first comes in, oil and gas travel up 
through the casing together. 

“In a new field the amount of gas that may 
be lost is tremendous, because facilities can 
readily be provided for handling oil, but not 
for taking care of the gas. The loss of oil 
155 


OIL—NEW MONARCH OF MOTION 


can be reduced to a minimum from a flowing 
well by providing a flow tank connected to 
the casing head; and providing oil savers 
and control casing heads. Gas and oil can 
be separated in the flow tank, the oil being 
drawn off into receiving tanks and the gas 
escaping into the air. 

“The gas in intimate contact with oil 
through the casing and through lines into 
the flow tank absorbs a large proportion of 
the light constituents of the oil, i.e., the gaso¬ 
line. Although the amount of gas escaping 
from flowing wells is tremendous, and is fre¬ 
quently saturated with gasoline, it is seldom 
treated for gasoline extraction because the 
supply is temporary and uncertain. 

“In the next stage the well settles down to 
a period of pumping. Oil is withdrawn 
through an inner casing and gas escapes from 
around the inner tubing and into the air at 
the casing head. Thus it has been in contact 
with oil in the strata and necessarily must be 
more or less saturated with part of the oil. 
This part is the gasoline. The constituents 
in the oil that are picked up and which mainly 
concern the natural gas gasoline operator, 
because they are the principal constituents 
156 


REFINING OF PETROLEUM 


of casing head gasoline, are the pentanes, 
hexanes, heptanes and octanes.” 

From some oil wells the flow of casing head 
gas is as low as 1,000 or 2,000 cubic feet a day, 
while some of the wells give forth several mil¬ 
lion cubic feet in 24 hours. It has been 
found, however, that the higher the pressure 
of the gas the lower the gasoline con¬ 
tent. 

Consequently, as the wells reach the stage 
of settled production and pumping is resorted 
to, the gas becomes richer in gasoline. Like¬ 
wise, the higher the temperature of the gas as 
it comes from the well the larger the amount 
of gasoline it is able to hold in suspension. 
The same rule applies here as to water vapor 
in the air. 

Depending upon the pressure, temperature 
and other factors, casing head gasoline con¬ 
tains amounts of gasoline varying from less 
than one gallon in 1,000 cubic feet to as high 
as six gallons or even more to 1,000 feet. 
In fact gas from some of the wells in the 
Kiefer field of Oklahoma is said to contain 
10 to 12 gallons of gasoline to 1,000 cubic feet, 
practically none of the gas remaining after 
it has passed through the plant. Govern- 
157 


OIL—NEW MONARCH OF MOTION 


ment statisticians, however, place the aver¬ 
age recovery at 2.57 per 1,000 feet of gas. 

Comparatively simple laboratory tests have 
been devised for determining the gasoline 
content of natural gas. These are useful 
to the oil producer in arriving at a decision 
regarding the possible profit to be derived 
from a plant for extracting gasoline from a 
given volume of casing head gas. 

The method usually selected for obtaining 
gasoline from “wet gas” is the compression 
and condensation process. In this, accord¬ 
ing to Mr. Burrell, single and two-stage com¬ 
pressors are used as a rule. Single-stage 
compressors ordinarily are used where pres¬ 
sures do not exceed 110 pounds a square inch, 
although they are used at some plants where 
pressures up to 150 pounds a square inch are 
employed. As the compression increases, 
what is called the volumetric efficiency, de¬ 
creases until, with a 150-pound single-stage 
compressor, it is only about 50 per cent. 

In the two-stage method the gas is com¬ 
pressed from 15 to 50 pounds per square inch, 
35 pounds probably being an average. The 
temperature of the gas, according to Mr. 
Burrell, may rise to 450° F., but no condensa- 

158 


REFINING OF PETROLEUM 


tion of gasoline occurs, because gases above 
this critical temperature may not be liquefied 
by pressure alone. 

It is at this point that the condensation 
process begins. In this stage of the opera¬ 
tion the mixture passes through water-cooled 
pipes. It is stated, however, that usually 
little liquid is obtained at this stage, but that 
which is obtained is collected and added to 
the main condensate. At some plants the 
amount is as much as 15% of the total. 

“After the mixture of gas and vapor has 
left the first cooler,” says Mr. Burrell, “it 
is conducted to the high-pressure cylinder 
of the compressor and subjected to a pres¬ 
sure varying perhaps from 200 to 300 pounds 
per square inch. The temperature is raised 
probably to 250° C. (482° F.) in the com¬ 
pression cylinder. The mixture, still under 
pressure, is next forced through pipe coils on 
which water of ordinary temperature falls. 
In some plants the coils are immersed in 
concrete vats in the ground. 

“An average temperature of probably 32° 
C. (90° F.) in summer and 40° C. in winter is 
maintained in the eastern part of the United 
States. 


159 


OIL—NEW MONARCH OF MOTION 


“The temperature is further reduced in 
some plants by passing it through expansion 
cooling coils, where it is rendered very cold 
while still at a high pressure by means of the 
expansion of residual dry gas into pipes 
surrounding it. The major portion of the 
gasoline is condensed following the reduction 
in temperature of the high-pressure gas. 

“The gas, stripped of its gasoline, then 
passes out of the expansion nozzle of the high- 
pressure coils and is in turn expanded against 
a low-pressure into the expansion coils. This 
residue gas is then piped away to natural gas 
lines or returned to the oil lease for operating 
pumps.” 

Casing head plants usually are located near 
the wells, it being desirable to construct them 
at points where it is possible to take the 
product from as many wells as possible. In 
some instances the gasoline extracted from the 
gas has proved a greater source of income for 
the oil operator than the oil production. 
The same may be said to apply regarding the 
gas itself. Casing head gas may be drawn 
from a well by the vacuum method long after 
it has ceased to be a producer of oil. 

The absorption process of extracting gaso- 
160 


REFINING OF PETROLEUM 


line from natural gas may be said to begin 
where the compression and condensation 
process leaves off. Its application, as ap¬ 
plied to the natural gas industry, is more 
direct, as it is used for treating so-called 
“dry gas.” Numerous public service cor¬ 
porations have installed absorption plants and 
have become gasoline producers, whereas they 
formerly merely were suppliers of natural gas. 

So-called “dry” natural gas for years 
has been known to contain gasoline. With 
the introduction of compression stations on 
natural gas-pipe lines to force the gas to con¬ 
suming centers, and the subsequent cooling 
of the gas after compression so that the lines 
could carry more of it, what is called “drip,” 
which is gasoline, assumed considerable pro¬ 
portions at some stations. 

As with casing head gas, the gasoline con¬ 
tent in “dry” gas becomes higher as pro¬ 
duction wanes and the pressure, as a result, 
decreases. It is asserted that gas coming 
from some of the old wells in the East con¬ 
tains as much as one gallon of gasoline to 
1,000 cubic feet. The quantity, however, 
may be as low as a pint, while some gases are 

practically devoid of gasoline content. 

161 


OIL—NEW MONARCH OF MOTION 


The absorption method consists of bringing 
the gas in contact with a heavy petroleum 
distillate, so-called mineral seal oil or straw 
oil usually being used. The oil absorbs the 
gasoline, as well as some of the heavier hydro¬ 
carbon bases. The oil then is pumped into a 
steam still and the gasoline is distilled out of 
the oil. 

The oil then is returned to the absorber and 
the process repeated indefinitely, the oil being 
used over and over again as a carrier of gaso¬ 
line from the absorber to the still. 

Various devices are used for bringing the 
oil in contact with the gas, perhaps the most 
efficient method being a vertical absorber 
which the oil enters at the top, splashing 
downward against baffle plates in order to 
expose a large surface to the gas which enters 
the chamber at the bottom. The gas as it 
enters the chamber at the bottom first comes 
into contact with oil that already has absorbed 
some gasoline. As the gas travels upward it 
loses more and more gasoline, the last being 
absorbed by the fresh oil that is entering at 
the top. The hot oil from the stills is cooled 
before it again enters the absorber. 

It may be said that every oil or gas well 
162 


REFINING OF PETROLEUM 


drilled is a potential producer of gasoline, 
aside from that extracted from crude oil 
through ordinary refining methods. In this 
phase of the industry the limit still is far 
ahead—opportunities for profit lie in every 
gas and oil field. As refining methods be¬ 
come still more efficient, and economies be¬ 
come more rigid with reference to gasoline in 
natural gas, the percentage of gasoline pro¬ 
duced as related to the production of crude 
oil unquestionably will assume surprising 
proportions. 


1 


163 


X 


TRANSPORTING AND MARKETING J 

Producing oil without adequate transpor¬ 
tation facilities would prove about as suc¬ 
cessful a financial venture as would raising 
California peaches for the New York market 
without refrigerator cars. 

Likewise the refinery must have facilities 
adequate for the transporting to it of crude 
oil and from it of refined products both for 
domestic and foreign markets. 

There are numerous refineries on the 
Atlantic seaboard to which oil is pumped 
through pipe lines directly from the Mid- 
Continent field. From the docks at these 
refineries vessels are sent to all parts of the 
world loaded with refined products. 

As the oil industry has been developed, 
likewise have been developed transportation 
facilities adequate to handle the oil as it is 
produced and the refined products that have 
been made ready for the markets of the 
world. 


164 


TRANSPORTING AND MARKETING 


There are three methods by which bulk 
petroleum at present is shipped—through 
pipe lines, by tank cars and in tank steamers. 

Most important of these methods, and, 
according to the investigation of the Federal 
Trade Commission, the most economical, is 
through pipe lines. Certain conditions, how¬ 
ever, make necessary the use of railways and 
steamships. These latter two methods pre¬ 
vail in the shipment of refined products, and 
sometimes are used for the transporting of 
crude oil. 

Tank steamers are necessary, for instance, 
to ship crude oil from the Mexican fields to 
the refineries of the United States. 

Producers far removed from pipe line sys¬ 
tems are compelled to use tank cars, at least 
until adequate pipe line facilities have been 
provided. / 

When petroleum first was produced in 
America—in the Oil Creek district of Penn¬ 
sylvania—the crude product was transported 
in iron-hooped wooden barrels. Teamsters 
hauled the barrels to Oil Creek and the Alle¬ 
gheny river. The cost of this method of con¬ 
veyance now would be regarded as appalling. 
For transporting a barrel containing 40 or 42 
165 


OIL—NEW MONARCH OF MOTION 


gallons, the cost sometimes ran as high as 
$3 for a distance as short as four miles. 

According to the report issued by the 
Federal Trade Commission in the early part 
of 1918, the cost of piping the oil from the 
wells to the trunk lines of a pipe-line system 
usually ranges from 3c. to 5|c. a barrel. 
Oil was pumped to the vicinity of Chicago 
from the Cushing Pool of Oklahoma, the 
Commission found, at a cost of 11 cents a 
barrel including depreciation. This is a dis¬ 
tance of about 700 miles. 

The cost of main or trunk line transpor¬ 
tation depends both on the length of the line 
and the aggregate volume of shipments. 
The Commission found, for instance, that 
the cost of pipe-line transportation from the 
Cushing pool to the Gulf of Mexico, a dis¬ 
tance of 500 miles, did not run less than 
16 cents a barrel. 

The tariff at the time the Commission’s 
investigation was made was 42 cents a barrel 
from Oklahoma to Chicago and 40 cents 
from the Cushing pool to Port Arthur, 
Texas, on the Gulf of Mexico. 

It is interesting to note what the Commis¬ 
sion learned regarding comparative cost to 
166 


Defined Oil and Gas Fields and Principal PirE Lines of United States 











































TRANSPORTING AND MARKETING 


tHe shipper of pipe line and railway transpor¬ 
tation. The railroad tariff on a barrel of oil 
from the Cushing pool to Kansas City, the 
investigators found to be 37 cents a barrel, 9 
cents a barrel higher than the pipe line tariff. 
To Whiting, Ind., from the Cushing pool, 
the railroad tariff was found to be 62 cents, 
or 20 cents a barrel more than the pipe-line 
rate. 

The greatest variation was found in 
tariffs to the Atlantic seaboard from Okla¬ 
homa. It was found that the tariff on a 
barrel of oil by rail was $1.40, or just twice 
the pipe-line tariff. 

But, to get back to the genesis of oil trans¬ 
portation in the United States. With the 
opening of the early Pennsylvania fields, Oil 
Creek and the Allegheny river formed the 
only practicable routes to the refineries— 
crude affairs that were constructed soon after 
the finding of petroleum in Pennsylvania. 

Empty boats were towed up Oil Creek by 
horses that waded in the stream. After the 
boats had been loaded they awaited a freshet 
to provide sufficient water to float them 
downstream, or, sometimes, the stream was 
dammed in order to deepen the water. 

167 


OIL—NEW MONARCH OF MOTION 


When a freshet occurred many boats would 
be floated down the stream together with 
great loss as a result of collisions and ground¬ 
ing. As many as 40,000 barrels of oil were 
sent down the stream during one of these 
freshets, but as a rule the amount was 
15,000 to 20,000 barrels. The oil was trans¬ 
ferred to larger boats at Oil City. 

One historian of the oil industry asserts 
that at one time there were more than 1,000 
boats, 30 steamers and 4,000 men engaged 
in this traffic. During a freshet in May, 
1864, a jam occurred at Oil City in which 
20,000 to 30,000 barrels of oil were lost. 

This method of transportation having 
proved inadequate, expensive and wasteful, 
the pipe line gradually was developed. In 
Asiatic countries in ancient times pipe lines 
were constructed of bamboo stems, but this 
plan was not successful because of excessive 
leakage. 

What is believed to have been the first 
suggestion in America that petroleum be 
transported by pipe line was made by S. D. 
Karns of Parkersburg, West Virginia, in 
1860. Mr. Karns proposed to lay from 
Burning Springs to Parkersburg, a distance of 
168 


TRANSPORTING AND MARKETING 


30 miles, a six-inch line through which oil 
would flow by gravity, the idea being to trans¬ 
fer the oil to Ohio river boats at Parkersburg. 

Although the Karns line was not laid, L. 
Hutchinson of New York in 1862 laid a line 
on the Tarr farm to send oil over a hill to the 
refinery. The syphon principle was used to 
draw the oil over the hill. A year later, Mr. 
Hutchinson constructed another line three 
miles long to carry oil from what was known 
as the Sherman well to the railroad. Air 
chambers were provided on this line at 
intervals of 50 to 100 feet to equalize the 
pressure. 

Neither of these lines proved successful, 
principally because of excessive leakage at 
the joints where the sections of pipe came 
together. 

It is believed that the first successful pipe 
line was constructed by Samuel Van Syckle 
of Titusville, Pa., in 1865. He solved the 
problem of leaky joints by joining the sec¬ 
tions of pipe with closely fitting screw- 
sockets. This line was four miles in length 
and the pipe was laid two feet underground. 

After this it was''not long until pipe-line 

history was made rapidly. 

169 ' 


OIL—NEW MONARCH OF MOTION 


A Mr. Harley in 1865 and 1866 constructed 
a pipe line from Benninghoff Run and the 
Shaffer Farm. A short time later he or¬ 
ganized the Pennsylvania Transportation 
Company and constructed a line from the oil 
fields of Pennsylvania to the Atlantic sea¬ 
board. A four-inch pipe line about 60 miles 
in length was laid in 1875 from the oil coun¬ 
try of Southwestern Pennsylvania to Pitts¬ 
burgh. 

Teamsters and others who began to see 
their means of livelihood go glimmering with 
the building of pipe lines, opposed the devel¬ 
opment vigorously. This opposition was 
overcome mainly by the speedy punishment 
of persons detected tampering with the newly 
constructed lines. 

By 1876 there were no less than eight or 
nine pipe-line companies operating in the 
oil regions. 

At that time the oil was refined in most 
instances near the district where it was pro¬ 
duced, but it soon was found that refiners at 
Cleveland, Pittsburgh, Buffalo, Boston, New 
York, Philadelphia and Baltimore were better 
situated for the marketing of kerosene and 
other petroleum products. Consequently, 
170 


TRANSPORTING AND MARKETING 


the transportation of crude oil to these 
centers increased rapidly in importance. 

The building of pipe lines to the seaboard 
was continuous from 1878 to 1882, with the 
result that the refining business carried on in 
or near the oil fields decreased, while large 
refineries were erected at the Atlantic sea¬ 
board and on the Great Lakes. Later, with 
the development of oil districts in Indiana, 
Ohio and Illinois, the lines were extended into 
these states. 

When the Louisiana, Texas, Oklahoma 
and Kansas fields were opened, pipes lines 
were laid to the Gulf Coast. Also the Mid- 
Continent field, consisting of Oklahoma and 
Kansas, was connected with lines that were 
linked up with the already existing trunk 
lines to the Atlantic coast refining centers, 
as well as with refineries in the vicinity of 
Chicago. 

The California fields naturally were given 
pipe-line connection with the Pacific coast 
ports, where the refining industry has become 
an important factor in the industrial struc¬ 
ture. 

Pipe-line systems now traverse the states 
of Texas, Louisiana, Oklahoma, Kansas, 
171 


OIL—NEW MONARCH OF MOTION 


Arkansas, Missouri, Iowa, Illinois, Indiana, 
Ohio, Pennsylvania, New York, West Vir¬ 
ginia, Kentucky, Maryland and New Jersey. 
California has her own system of pipe lines, 
connecting the various fields with refineries 
on the coast. 

Wyoming also rapidly is linking her numer¬ 
ous producing fields with the refineries by 
means of pipe lines. 

Accurate data as to the total pipe-line 
mileage in the United States are difficult to 
obtain. It is estimated, however, at the 
gigantic total of 50,000 to 60,000 miles—or 
an amount sufficient to girdle the earth twice. 
A large part of this mileage is in trunk or 
main lines, while the total of small “gath¬ 
ering” lines extending to the wells would 
boost even this huge total considerably. 
New lines are being constructed contin¬ 
uously, the Ranger discovery causing an 
aggressive renewal of pipe-line activity. 

Millions upon millions of dollars are in¬ 
vested in these pipe lines. The Federal 
Trade Commission in 1916 found that the 
average cost of building and equipping an 
eight-inch pipe line, based on the cost of 
constructing 2,200 miles of line by six differ- 
172 


TRANSPORTING AND MARKETING 


ent companies, was approximately $9,000 a 
mile. 

Steel prices, however, maintained a steadily 
upward trend in 1917 and 1918, making the 
cost of lines laid in those years very much 
higher than the Trade Commission estimate. 
Prices began a gradual decline with the cessa¬ 
tion of hostilities in Europe. 

It would appear, therefore, that the 
50,000 or 60,000 miles of pipe line in the 
United States probably represent a com¬ 
bined investment that would not lack a 
great deal of reaching the immense total of 
$500,000,000. 

The building and operating of a pipe line is 
an undertaking that requires not only a great 
deal of capital, but also a large amount of 
judgment. The ordinary producer, of course, 
can not have his own pipe line because of its 
prohibitive cost. Consequently, except in 
case of great companies which form com¬ 
plete producing, transporting, refining and 
marketing organizations, the transportation 
of oil by means of pipe lines is in the hands 
of companies that make that their exclusive 
business. 

The pipe line is the connecting link be- 
173 


OIL—NEW MONARCH OF MOTION 


tween the producer and the refiner. The 
producer looks to the pipe-line company to 
keep the tanks on his leases empty and the 
refiner looks to the company to keep his 
tanks full of crude oil. 

In a great many cases new oil fields are 
developed in territory far removed from 
transportation facilities. As soon, however, 
as a new field has been proved of sufficient 
importance to warrant the building of a pipe 
line to take care of its production, the pipe 
line men are on the ground. 

First a survey is made from the field to 
the nearest point at which connection may 
be had with a trunk-line system or terminal. 
Rights of way are obtained, estimates are 
made concerning the volume of oil to be 
handled and then pipe, tanks, pumping 
machinery and other equipment, as well as 
material for the building of stations, is 
ordered. 

In some cases surveys are made and rights 
of way obtained before the field has actually 
been developed to a basis of profitable pro¬ 
duction. In a case of this kind the pipe¬ 
line company simply holds its plans in abey¬ 
ance until the field has been proved. 

174 


TRANSPORTING AND MARKETING 


A notable divergence from this rule forms 
one of the romantic incidents of the oil 
industry. It is stated that when E. L. 
Doheny was developing the great oil fields of 
Mexico, he expended more than $2,000,000 
on pipe line and other equipment before he 
had a barrel of production for the pipe line 
to handle. His judgment was vindicated, 
however, with the bringing in of the greatest 
“gusher” well of the world’s history—Cerro 
Azul, with initial flow of 260,000 barrels 
daily. 

As the oil business has developed, the size 
of the pipes used has increased. Formerly 
pipe 2, 3 and 4 inches in diameter was used. 
Now, however, a 6-inch pipe is regarded as 
the minimum size for a line 50 or more miles 
in length. The great proportion of trunk 
line mileage is of 6- and 8-inch pipe, but 
there are some lines in which 10-, 12-, or even 
14-inch is used. 

When a pipe line is to be laid, the first 
step is to clear the right of way of timber, 
brush and other obstructions. The pipe 
then is distributed and a crew of pipe-line 
layers put in the field. For an 8-inch line 
each crew numbers about 75 men, consisting 
175 


OIL—NEW MONARCH OF MOTION 


of a foreman, stabbers, tongsmen, ropemen, 
barmen, jackmen, etc. The outfit also con¬ 
sists of a movable camp in which the men are 
housed and fed. The line is laid above 
ground by this crew, which is followed by the 
ditching crew. This second crew buries the 
line in a trench 24 to 30 inches deep. 

A pipe-line crew of the size mentioned 
is able to screw together in a day some 200 
to 250 joints of pipe of an average length of 
20 feet, or 4,000 to 5,000 feet a day. Some 
slack is left in the line to allow for expansion 
and contraction brought about by tempera¬ 
ture changes. 

When the line or a certain section of it 
has been laid and placed in the ditch, but 
not covered, it is tested with water at a 
pressure of 800 to 1,000 pounds to the square 
inch. This develops any leaks or weak spots 
in the line. 

Usually stations on a trunk line are placed 
from 40 to 50 miles apart, an effort always 
being made to place them near a town or rail¬ 
road and near an adequate water supply. 
The stations are provided with a pump house, 
a boiler house, office, manifold house, ware¬ 
house and at least two steel tanks of a 
176 


TRANSPORTING AND MARKETING 


capacity of 37,500 to 55,000 barrels 
each. 

The equipment of a typical station of the 
Texas Company includes from four to eight 
175 horsepower water-tube boilers, supplied 
by either natural gas or oil as fuel; one pump¬ 
ing engine with 36-inch flywheel; two direct- 
acting compound duplex pumps; electric 
light plant and auxiliary machinery. 

Included in a pipe line operating organiza¬ 
tion are general superintendents, district 
superintendents, superintendents of tele¬ 
graph, chief engineer, superintendent of 
tankage, district foremen, gaugers, connec¬ 
tion men, station engineers, station firemen, 
telegraph operators, station helpers and line 
riders. 

At the main office is located an individual 
known as the oil dispatcher, whose duty it 
is to keep close check on the oil received and 
pumped, and a station will not start pumping 
except on his order. 

An elaborate accounting system is super¬ 
vised by the department agent. This in¬ 
cludes the recording of the various transac¬ 
tions and the accounting each day for every 
bit of oil received and delivered. 

177 


OIL—NEW MONARCH OF MOTION 


Wooden tanks built by the producer on 
his lease receive the oil as it flows or is 
pumped from the well. These tanks are 
connected by the pipe-line company with its 
lines, and as the tanks are filled the pipe-line 
gauger is notified and he runs the oil, gauging 
and inspecting it as to quality, the producer 
or his representative being present as the 
gauger works and as he turns the tank on 
and off the line. The valve is sealed be¬ 
tween runs. 

The run tickets, showing the gauge and 
inspection, after being signed by gauger and 
producer, are forwarded to the pipe-line com¬ 
pany’s office for recording. As soon as the 
producer has received his run ticket he may 
sell his oil at the prevailing market price. 

From the tank of the producer the oil is 
sent into the nearest pipe-line station tanks, 
the station reporting to the company’s office 
the amount received from each district. 
Carefully computed tables for each producer 
and station tank are on file in the office 
and the amount received is checked with 
the runs. 

The oil is pumped by the receiving station 
to the nearest trunk-line station, which, in 
178 


TRANSPORTING AND MARKETING 


turn, sends it along the line from station to 
station until it reaches the refinery, or an 
ocean terminal where it is delivered to tank 
steamers. 

It is estimated that a single 8-inch line 
will handle about 30,000 barrels of oil a day 
from gathering lines. 

Used principally for the transportation 
of refined products are the tank cars. Fre¬ 
quently, however, tank cars form the only 
outlet for oil from an isolated territory. 
This is the situation at present in Wyoming 
and Montana, which have not yet been tapped 
by pipe lines that will give connection with 
seaboard points. It is believed, however, 
that the time is not far distant when this ter¬ 
ritory will have trunk-line connection to the 
East. 

When tank cars are used, loading stations 
are provided at the producing property or 
refinery. The oil sometimes is fed into the 
cars from overhead tanks by gravity, while, 
in other cases, the fluid is pumped in from 
tanks at a lower level. The same systems 
are used in emptying the tank cars, depend¬ 
ing on the elevation of the receptacles in 

which the oil is to be placed. 

179 


OIL—NEW MONARCH OF MOTION 

Practically every refining company that 
makes any pretension of being well equipped 
owns a large number of tank cars. 

One concern in California confines its 
business entirely to the operation of tank cars. 
It was reported in 1918 to own approximately 
19,000 tank cars, which are leased to shippers 
at rental charges according to capacity. In 
addition the company receives a mileage rate 
from the railroads. Most refining companies 
operate large fleets of tank cars in which both 
crude oil and finished products are trans¬ 
ported. 

Some tank cars are divided into compart¬ 
ments for transporting different kinds of 
refined products. Others are bulk carriers 
with facilities for carrying only one kind of 
oil. The capacity of the tank cars ranges 
from 3,600 to 12,500 gallons. 

Where facilities are available for water 
transportation, it has been found much more 
economical to use this method than to ship by 
rail. It is the only means, for instance, of 
transporting crude oil from the fields of Mex¬ 
ico to the refineries and consumers in the 
United States and other countries. They 
are absolutely necessary to the development 
180 


Oil Tanker “J. W. Van Dyke” 

Length 451 feet, capacity 3.502,490 gallons—also burns oil as fuel 
















TRANSPORTING AND MARKETING 


of an export trade, and this phase of the in¬ 
dustry recently has caused America’s oil¬ 
carrying fleet to be enlarged materially. 

For the marketing of refined products the 
large refining companies maintain distrib¬ 
uting stations at the leading cities through¬ 
out the country. Some of these installa¬ 
tions receive the refined products in bulk, 
packing them in the container deemed best 
to meet the needs of the retail trade. Through 
foreign subsidiaries some of the larger com¬ 
panies maintain large marketing organiza¬ 
tions in all parts of the world. 

Oil in bulk, in barrels and as “case goods” 
is sent to these foreign stations, from there to 
be transported by rail, river barges, cart or 
coolie perhaps to the interior of India or 
China. 

Many companies in connection with their 
distributing stations throughout the United 
States maintain large sales forces and fleets of 
motor trucks and horse-drawn vehicles. The 
distributing systems work right down to the 
individual motorist and the purchaser of a 
five-gallon container of kerosene. 

Even in the rural districts the fuel needs of 
the tractor, gasoline engine and automobile 
181 


OIL—NEW MONARCH OF MOTION 


are taken care of by the oil company’s tank 
wagon, a stock of lubricating oils also being 
carried. There is no need of any one seeking 
far when in need of petroleum products, for 
the retail stores form an important adjunct 
to the marketing system—especially for the 
highly specialized products. Curb pumps at 
frequent intervals in the cities make the pur¬ 
chase of gasoline by the motorist most con¬ 
venient. 

Although it may readily be seen that the 
pipe line is the most important single ele¬ 
ment in oil transportation, the tank cars and 
tank steamers are equally as important in 
their spheres. Without tank steamers it 
would be practically impossible to develop an 
export trade of great dimensions. 

If there were no tank cars there would be 
little chance of the oil producer being able 
to market his production before the building 
of pipe lines, to market excess production 
above what it is possible for the pipe lines to 
carry, or for the refiner to ship the products of 
his plant in bulk. 

All of them are necessary and vital to the 
great petroleum industry. 


182 


XI 


OIL—PRESENT AND FUTURE 

Economically the petroleum problem is 
not one of demand, but of being able to sup¬ 
ply the demand. Even though production 
has been gaining substantially for a score of 
years, the demand has grown even more 
rapidly, with the result that prices in 1918 
and early in 1919 were at the highest figure 
since the industry had gained a scope that 
could be regarded as anything more than 
local. 

And, according to Mark L. Requa, director 
general of the Oil Division of the United 
States Fuel Administration, crude oil prices, 
under the stress of war demand, would have 
gone even higher had not the law of supply 
and demand been temporarily abrogated 
and a system of price regulation adopted. 
He asserted that the situation in his opinion 
really warranted higher prices. 

And again, in further proof that the petro¬ 
leum industry was not dependent on war for 
its rapid growth in prosperity, are the figures 
183 


OIL—NEW MONARCH OF MOTION 


on production of copper, iron ore and steel as 
compared with oil for the similar periods just 
preceding and during the war. 

Statistics show that in the four years just 
preceding the war copper production gained 
10%, iron 2% and steel 9%, while during the 
war period the increase for copper was 50%, 
for iron 42% and for steel 57%. On the 
other hand the gain in oil production in the 
pre-war period was 31%, or more than any of 
the metals mentioned, while, during the war 
period the output gained only 32%, or much 
less than any of the other minerals. That 
the war rate and the pre-war rate were prac¬ 
tically the same is significant. 

The 1918 production figure means oil 
marketed from the wells. It does not include 
some 27,000,000 barrels taken from storage 
tanks of producers and pipe-line companies. 
Nor does it take into consideration some 
36,500,000 barrels of oil shipped into the 
United States from Mexico. About 5,500,- 
000 barrels of crude oil were exported. Which 
means that the domestic consumption, even 
after subtracting 20% for exports of refined 
products, was approximately 323,000,000 
barrels—or between three and three and one- 
184 


OIL—PRESENT AND FUTURE 


half barrels for each man, woman and child 
in the United States. 

Until 1916 it was possible to keep the pro¬ 
duction of crude oil ahead of consumption, 
thereby permitting the storage of large quan¬ 
tities of unrefined oil to meet future eventu¬ 
alities. This practice also served as a price 
stabilizer. But in 1916 the consumption for 
the first time forged ahead of production. 

The surface reserves of crude petroleum 
in the United States at the end of July, 1916, 
were estimated at 189,283,766 barrels. By 
the end of 1916 they had been reduced by 
15,000,000 barrels, the estimated total being 
174,028,351. The reduction in 1917 amounted 
to about 24,000,000 barrels, while the re¬ 
serves in 1918 were drawn upon to the esti¬ 
mated total of 27,000,000 barrels. 

The surface reserves, therefore, in two and 
one-half years were reduced from 189,283,766 
to 123,000,000 barrels, a total reduction of 
more than 66,000,000 barrels. This means 
that in the period from July, 1916, to the end 
of 1918 there were consumed in the United 
States and by her export customers 66,000,- 
000 more barrels of petroleum than the fields 
produced in that period. 

. 185 


OIL—NEW MONARCH OF MOTION 


How vast has become the demand for 
petroleum is indicated by the fact that the 
country’s production in 1898 was 55,364,- 
233 barrels. 

This means a gain in 20 years of more than 
500%. Each succeeding year in that 20- 
year period showed a substantial increase, 
with the single exception of 1906. The gain 
in 1918 over 1917, despite the almost des¬ 
perate effort that was made, was only a little 
more than 3%. So, while the demand for 
petroleum continues to gain momentum, the 
rate of increase in production has slowed up 
very perceptibly. 

The production of the United States in 
barrels of 42 gallons each by years from 1860 
to 1918, inclusive, follows: 


1860 . 500,000 

1861 . 2,100,000 

1862 . 3,000,000 

1863 . 2,600,000 

1864 . 2,100,000 

1865 . 2,500,000 

1866 . 3,500,000 

1867 . 3,300,000 

1868 . 3,600,000 


186 











OIL—PRESENT AND FUTURE 

1869 . 4,200,000 

1870 . 5,300,000 

1871 . 5,200,000 

1872 . 6,200,000 

1873 . 9,900,000 

1874 . 10,900,000 

1875 . 12,200,000 

1876 . 9,100,000 

1877 . 13,300,000 

1878 . 15,400,000 

1879 . 19,900,000 

1880 . 26,200,000 

1881 . 27,600,000 

1882 . 30,500,000 

1883 . 23,400,000 

1884 . 24,200,000 

1885 . 21,900,000 

1886 . 28,000,000 

1887 . 28,200,000 

1888 . 27,600,000 

1889 . 35,100,000 

1890 . 45,800,000 

1891 . 54,300,000 

1892 . 50,500,000 

1893 . 48,500,000 

1894 . 49,300,000 

1895 . 52,900,000 

187 





























OIL—NEW MONARCH OF MOTION 


1896 . 60,900,000 

1897 . 60,500,000 

1898 . 55,300,000 

1899 . 57,100,000 

1900 . 63,600,000 

1901 . 69,300,000 

1902 . 88,700,000 

1903 . 100,400,000 

1904 . 117,200,000 

1905 . 134,700,000 

1906 . 126,500,000 

1907 . 166,100,000 

1908 . 178,600,000 

1909 . 183,200,000 

1910 . 209,700,000 

1911 . 220,400,000 

1912 . 223,000,000 

1913 . 248,300,000 

1914 . 265,700,000 

1915 . 281,100,000 

1916 . 300,700,000 

1917 . 335,300,000 

1918 . 345,500,000 

The relation of the motor car to the demand 
for gasoline is indicated by the fact that in 
1914 the gasoline production was 34,915,000 
188 

























OIL—PRESENT AND FUTURE 


barrels, while the output of gasoline in 1918 
is estimated to have been more than 85,000,- 
000 barrels, of which only about 13,500,000 
barrels, or 15% was exported. The aero¬ 
plane and other speed devices using the in¬ 
ternal combustion engine now are accentu¬ 
ating vastly this demand. 

Total exports of petroleum and petroleum 
products in recent years follow: 1913, 
50,870,612 barrels valued at $149,316,409; 
1914, 53,334,120 barrels valued at $139,900,- 
587; 1915, 55,445,848 barrels valued at 

$142,491,669; 1916, 62,083,124 barrels valued 
at $201,732,563. The exports in 1917 were 
63,121,865 barrels, while in 1918 they were 
66,004,363. 

The gradual growth of the export figures 
indicates that the intrusion of war conditions 
into the situation late in 1914 did not in¬ 
crease the export movement beyond its nor¬ 
mal rate of growth—this even though the 
United States supplied 80% of the petroleum 
consumed by the Allies. 

The proportion of fuel and gas oil, gasoline 
and naphthas, crude oil, lubricating oils, and 
paraffin to the total exports did, however, 
increase from 1913 to 1918. The governing 
189 


OIL—NEW MONARCH OF MOTION 


factor in this, of course, was that ordinary 
export channels were neglected and war need 
became all-important. The exportation of 
gasoline and naphthas in 1918 was 565,819,- 
341 gallons as compared to 188,043,379 gal¬ 
lons in 1913. Fuel and gas oil exports grew 
from 359,008,618 gallons in 1913 to 1,123,- 
473,047 gallons in 1917 and 1,202,342 gallons 
in 1918. The crude oil increase was slight, 
being from 194,569,634 gallons in 1913 to 
203,410,393 gallons in 1918. 

The exports of lubricating oils and par¬ 
affin in 1918 were 257,372,942 gallons as 
against 207,639,902 gallons in 1913. Ex¬ 
ports of illuminating oils decreased from 67,- 
863,775 gallons in 1913 to only 1,240,535 
gallons in 1918> 

But, while the percentages of gasoline and 
naphtha and other products increased, so 
also did the production of these various fuels. 
And the motor cars of the United States were 
compelled to go on short fuel rations in order 
to provide the export supplies. 

Then, too, the domestic consumers in 
Europe and other countries that ordinarily 
look to America for petroleum were forced 
to do without. 


190 


OIL—PRESENT AND FUTURE 


Regarding the future of the gasoline sit¬ 
uation, oil men are confident that the demand 
will continue so keen as to absorb the pro¬ 
duction in as great quantities as the wells and 
refiners are able to produce it. 

For instance there was said to be a de¬ 
mand in the United States in 1919 for approx¬ 
imately 3,000,000 motor cars, while the 
manufacturers would be able to turn out 
perhaps half that number—or a total in one 
year equivalent to the entire number in use 
in 1914. 

Already from 1914 to 1919 there had been 
a 300% gain in the number of motor vehicles, 
while oil production gained only 32%. The 
situation called for higher extraction of gaso¬ 
line from crude oil by the refiners, as well as a 
very substantial growth in the casing-head 
gasoline industry. The “cracking” proc¬ 
esses have been of invaluable aid in this 
respect. 

The potentialities of the Mexican fields 
have been looked upon in some uninformed- 
quarters as boding ill for the production of 
gasoline from United States oils. It is well 
to recall, however, that the gasoline content 
of Mexican oils ranges from practically noth¬ 
in 


OIL—NEW MONARCH OF MOTION 


ing to 10%—or, perhaps, 15% if “cracking” 
is resorted to. Whatever gasoline is ob¬ 
tained from Mexican crude will be welcomed 
in order to help overcome the shortage that 
already appears imminent. 

It is in the fuel oil division that Mexico is 
looked upon as the future savior. As before 
stated, there is developing an enormous 
demand for fuel oil for steaming and direct- 
heating purpose. This applies more par¬ 
ticularly to the steamship lines, although 
there is a growing consumption by the rail¬ 
ways and in the industries. Gasoline and 
fuel oils, therefore, are regarded as the staples 
of the industry. 

The demand for kerosene, especially for 
export to the Orient, is large, while the need 
for lubricating oil and other products nat¬ 
urally must continue to increase. 

The average yield of gasoline from the vari¬ 
ous refineries of the country may be said to 
be 25% or 26%, while kerosene is about 13%, 
gas oil and fuel oil 53% and lubricating oils 
slightly more than 6%. 

The dominating part the United States is 
to play in the world commerce of the future 
not only will call for an immense growth in 

192 


OIL—PRESENT AND FUTURE 


the consumption of fuel oil, but will 
result in the development of new export 
sources of demand for any surplus of pro¬ 
ducts not absorbed domestically—especially 
kerosene. 

The number of American tank steamers 
at the beginning of 1919 was 230, com¬ 
pared with less than 100 in 1914. 

That oil is superior to coal as a fuel, 
especially for maritime purposes, has 
been proved conclusively. It is estimated 
that, ton for ton, fuel oil has 30% to 
60% more heating value than coal. It is 
also said to save at least 45% in bunker 
space. This saving would be even more 
if the oil were stored in the double bottom 
of a vessel. 

It also is asserted that on large steamships 
such as the Aquitania and Mauretania the 
fire-room force could be reduced from 312 to 
27 men. Cleanliness, increased travelling 
speed and rapidity in fuel loading are other 
advantages. 

Regarding the supply of petroleum re¬ 
maining in the fields already discovered in 
the United States, the Geological Survey 

has prepared the following table: 

193 


OIL—NEW MONARCH OF MOTION 


Present 
Average 
Gas Ex¬ 
traction 
Per Cent. 

28.0 

20.0 

22.0 

24.0 

33.0 

28.0 

1.5 

40.5 

12.0 

1 

Available Oil 
Left in Ground 
January, 1919. 

500,000,000 

40,000,000 

175,000,000 

1,725,000,000 

400,000,000 

100,000,000 

750,000,000 

400,000,000 

2,250,000,000 

350,000,000 

6,740,000,000 

Total Marketed 
Production End 
of 1918. 

1,221,737,000 

448,404,000 

298,159,000 

990,573,000 

78,971,000 

90,902,000 

303,054,000 

39,793,000 

1,114,000,000 

10,651,000 

4,598,144,000 

Marketed 

Production, 

1918. 

25,300,000 

3,100,000 

13,300,000 

139,000,000 

15,600,000 

13,000,000 

21,700,000 

12,370,000 

101,300,000 

230,000 

345,500,000 

Marketed 

Production, 

1917. 

24,932,205 

3,670,293 

15,776,860 

144,043,596 

10,900,646 

8,561,963 

24,342,879 

8,978,680 

93,877,549 

230,930 

335,315,601 

Oil Fields. 

Appalachian. 

Lima, Indiana. 

Illinois. 

Mid-Continent.. 

North Texas. 

North Louisiana. 

Gulf Coast. 

Wyoming. 

California. 

Alaska, Colorado, Michigan, 
Montana, etc. 

Total. 


194 


























OIL—PRESENT AND FUTURE 


“The increasing use of oil all over the 
world and the consequent demand on present 
production,” said W. C. Teagle, president 
of the Standard Oil Company of New Jersey, 
early in 1919,” require the strictest conserva¬ 
tion of existing resources.” 

One of the best evidences of increasing 
future prosperity in the oil industry was that 
some of the largest organizations in the 
country began in 1918 and 1919 an enormous 
program of refinery construction, especially 
along the Atlantic coast. The eastern sea¬ 
board previously had been the location of 
numerous large plants, the location being 
advantageous not only to meet the export 
demand, but also to supply the needs of the 
densely populated districts in that section of 
the country. 

Some of the new plants are without pipe¬ 
line connections with the fields in the interior 
of the country. They will receive their sup¬ 
plies of crude principally by tank steamer 
from Mexico and Gulf Coast ports of the 
United States. Oil from the immense new 
Ranger development for the new plants will be 
piped to the Gulf Coast and there put aboard 
vessels and carried to the Atlantic Coast. 

195 


OIL—NEW MONARCH OF MOTION 

In view of the Geological Survey estimates 
that about 40% of the known underground 
oil reserves have been exhausted, the ques¬ 
tion naturally arises as to where the oil 
industry of the United States is to obtain its 
oil after another decade or more. 

It is unreasonable to believe that all the 
country’s oil fields have been discovered—as 
witness the Ranger find. Also refining meth¬ 
ods will continue to be improved, so that the 
percentage of desirable products will be in¬ 
creased. It is said that even now as high as 
60% of gasoline, by the application of the 
most modern refining practice, is obtainable 
from some of the high-grade oils. 

Then, as the amount of crude oil obtain¬ 
able from wells decreases, there will come an 
increasing development of the oil shale beds 
that lie in the Western States—principally 
Colorado and Utah. 

It is not at present profitable to treat these 
shales, which, in many cases, crop out on the 
surface. It will, however, be profitable as 
the price of petroleum products advances. 
In fact the practice of distilling crude oil out 
of shale has been profitably practiced in 

Scotland for many year. 

196 


OIL—PRESENT AND FUTURE 


Authorities assert that the amount of oil 
obtainable from the shale beds already dis¬ 
covered will dwarf into insignificance the 
huge total that has or will be produced from 
wells—they assert that the total will run into 
many billions of barrels. The amount of oil 
obtainable from the shale ranges roughly 
from one-half to one barrel from each ton of 
shale treated. 

The progressive oil companies of the coun¬ 
try when the time is ripe will enter this phase 
of the business—but this apparently will not 
be for some time. 

That profits from the oil business are for 
only a chosen few is a fallacy that the in¬ 
vestors of the country just now are beginning 
to appreciate. 

It is true that John D. Rockefeller and his 
associates did hold the reins pretty closely 
for many years after Mr. Rockefeller first 
became interested in oil about 1865. But 
the industry became too large for one group 
of men to dominate it. Gradually there 
was room enough for others. 

The opening of the Gulf Coast field gave 
the independent operators and refiners a real 
opportunity to gain a foothold. Then the 
197 


OIL—NEW MONARCH OF MOTION 


Government by the Supreme Court decision 
of 1911 ordering that the Standard Oil Com¬ 
pany of New Jersey be broken up into numer¬ 
ous units, did much to clarify the situation 
and hearten the independent operators. The 
bugaboo was removed. 

The Mid-Continent development was a 
case of “a fair field and no favorites.” Inde¬ 
pendent producers, pipe-line companies and 
refiners operate as friendly neighbors with 
companies that belong to the so-called 
Standard Oil group. 

And the profits accruing to these inde¬ 
pendent companies frequently are even larger 
in proportion to the capital invested than 
those registered by the Standard Oil organi¬ 
zations. 

Concrete evidence of the appreciation in 
market value of securities of ably managed 
oil companies is embodied in figures regard¬ 
ing the Standard Oil companies. At the 
time of its dissolution by Supreme Court 
order in 1911, the Standard Oil Company of 
New Jersey was capitalized at $100,000,000 
and the market value of its shares was 
$400,000,000. As against this amount, the 
market value of the various constituent 

19S 


OIL—PRESENT AND FUTURE 


Standard Oil companies on May 1 , 1919, was 
in excess of $2,500,000,000. This was a gain 
in eight years of $2,100,000,000, or 525%. 

Nor are the profits of the Standard Oil 
Companies available to a favored few any 
more than are those of the independent com¬ 
panies. There are regular open markets for 
the shares and they may be purchased by 
any investor, just as may be obtained shares 
in other oil companies. 

The oil business is not a closed proposition. 
It is a gigantic industry with profits avail¬ 
able to anyone who will apply the ordinary 
principles of business judgment to his invest¬ 
ment in oil company shares. 


199 


XII 


SELECTING OIL SECURITIES 

Among our greatest national assets is petro¬ 
leum. It is stated by one statistician that 
the exports alone of oil and its by-products 
had up to 1919 reached a total of approx¬ 
imately $4,000,000,000. And the exports 
at no time have averaged more than about 
one-fifth of the total—which would mean a 
total valuation on the country’s output 
around the stupendous total of $20,000,000,- 
000 . 

The annual production of petroleum in the 
United States—with the greatest era of pros¬ 
perity apparently just beginning—is said to 
be eight times as valuable as the annual out¬ 
put of gold. In fact it is estimated that it 
exceeds in value the total annual output of all 
other minerals—gold, silver, platinum, lead, 
zinc, etc., possibly excepting iron and coal. 

That the percentage of success in oil-pro¬ 
ducing operations is high is indicated by the 
estimated results of 1918. The number of 
wells drilled in the United States in that year, 
200 


SELECTING OIL SECURITIES 


according to a well-known oil publication, 
is put at slightly less than 25,000, of which 
about 5,650 were unproductive and about 
2,200 gas wells. It would seem, therefore 
that about 77J% were paying ventures— 
some of them vastly so. These estimates are 
not official. Some authorities consider the 
percentage too high. 

This total is said to include wells drilled in 
unproven territory, where the chances of 
striking oil in many instances are decidedly 
scant. The reward is great, however, when 
oil is struck in new territory—and it is these 
pioneering operations that result in expand¬ 
ing the oil-producing areas. 

What are the rules to follow in making in¬ 
vestments that open the way to participa¬ 
tion in the vast profits of the oil industry? 

Sound business principles should be ap¬ 
plied to the purchase of oil securities just as 
surely as they should be applied to the forma¬ 
tion of a business partnership with a man or 
group of men. For the purchaser of shares 
of a company’s capital stock becomes a 
partner in that organization. 

Only too frequently, however, the would- 
be investor in oil securities permits a wealth of 
201 


OIL—NEW MONARCH OF MOTION 


adjectives to strangle his normal conserva¬ 
tism and good business judgment. This 
applies particularly to promotion literature 
of new companies that too frequently are 
organized for promotion profits rather than 
with the intention of conscientiously en¬ 
deavoring to build up a profitable business. 
The result of such a “plunge” is that the 
money is put in first and the business analysis 
made afterward. 

As in any other line of endeavor, securities 
that represent known earning ability, or, in 
other words, seasoned dividend payers, are 
the most desirable from a conservative in¬ 
vestment point of view. 

But the way to the greatest profits lies in 
the ability to discern the possibilities of a 
company in the constructive stage, or of a 
company that, already a profitable concern, 
faces an era of even greater financial success— 
with its attendant possibilities of stock dis¬ 
tributions and greater dividend disburse¬ 
ments. 

More important even than a new com¬ 
pany’s properties, in the opinion of suc¬ 
cessful oil investors, is the character, experi¬ 
ence and business ability of the men in 
202 


SELECTING OIL SECURITIES 


charge of the company’s affairs. It is a fact 
that many investments are based solely on 
faith in the management. 

It not infrequently happens that properties 
that have real merit do not pay because of 
unscrupulous, inefficient or inexperienced 
management. These same properties have 
been made to return substantial dividends 
to the shareholders when placed in the hands 
of capable and honest men. 

It is the plain business principle of knowing 
to what manner of men you are entrusting 
the administration of a part of your estate. 

It is only following out the policies of sound 
business judgment to consult available sources 
of trustworthy information before arriving at 
a decision concerning the purchase of oil 
securities. Shares should be favored that 
are traded in definitely established markets, 
with regularly published price quotations. 

The New York Curb Market is the largest 
market for oil securities in the world. It is 
there that the shares of the Standard Oil 
companies as well as numerous meritorious 
independent organizations find their market 
place. 

Reliable brokers are prepared to supply 
203 


OIL—NEW MONARCH OF MOTION 


accurate information regarding the companies 
whose shares have a regularly established 
market place. 

Next to its management, the location and 
possible value of a company’s holdings have 
a vital bearing on its future possibilities. If 
there are no producing wells on the acreage, 
it should be learned if there are wells on 
adjoining tracts. 

If there are wells on all sides of the prop¬ 
erty, or on three sides, the percentage of risk 
is very low; but it increases in ratio to the 
absence of wells in close proximity to the 
tract in question and the lack of geological 
evidence indicative of the presence of oil in 
commercial quantities. 

If, in the case of a new company, the opera¬ 
tions are to be conducted in unproven terri¬ 
tory considerable distance from producing 
properties, the opinions of competent and 
reputable geologists, along with the presence 
or absence of oil or gas seepages or other sur¬ 
face indications, have to be depended 
upon. 

That a majority of new oil pools are dis¬ 
covered as a result of geological investiga¬ 
tion is shown by the fact that 31 of the oil 

204 


SELECTING OIL SECURITIES 


pools of Oklahoma and Kansas are said to 
have been discovered with the aid of geolo¬ 
gists, while 26 are ascribed to the efforts of 
“wildcat” drillers without geological coun¬ 
sel. 

In considering a company’s production 
it is important to know something of the age 
and number of wells from which the oil is 
coming. Oil wells as they attain age de¬ 
crease their production until they finally 
settle down to a steady flow. 

In fact, a statistician for the Standard Oil 
Company of New Jersey in May, 1919, 
placed the average production of the 225,000 
wells in the United States at only 4| barrels 
each daily. Thousands of wells in the older 
fields, he said, produced less than one-quarter 
of a barrel daily, while something like four- 
fifths yielded less than one barrel each. 

The writer recalls one especially good 
example of the importance of knowing 
whether the production is “flush” (new) or 
“settled,” as well as something of the repu¬ 
tation of the district for dependability. When 
shares of the company’s stock were offered 
for subscription the company had on one 
lease wells that were producing 4,000 barrels 
205 


OIL—NEW MONARCH OF MOTION 


a day. Eighteen months later, although sev¬ 
eral new wells had been drilled on the lease, 
its production had fallen to 60 barrels a 
day. 

Sands of great thickness naturally prove to 
have the longest life as producers. 

In this same connection it is well to con¬ 
sider the advantage of a great number of 
wells with “settled” production over a few 
at the “flush” stage. If a company has two 
wells producing 2,000 barrels a day, its risk 
is concentrated. Should one of the wells 
cease to flow, the income is cut in half. Like¬ 
wise, as the wells undergo the natural settling 
process, the return becomes correspondingly 
less. 

But suppose a company’s 2,000 barrels a 
day of production comes from 200 wells in¬ 
stead of two. The low average production 
per well shows that the wells have passed 
through the settling process and are at a stage 
of steady output. Should one or two, or even 
ten, of these wells become worthless, the effect 
would not be serious. The company’s risk 
has been scattered. 

It also is obvious that a company that in¬ 
tends to expand and grow in prosperity over 
206 


SELECTING OIL SECURITIES 


a period of years can not accomplish that end 
by pinning its faith to one lease or even to one 
small productive district. 

The young company should devote part 
of its profits to the acquisition and develop¬ 
ment of new leases—perhaps in a number of 
fields. The holding of properties in numer¬ 
ous districts, with acreage in reserve for 
future development, is the policy adhered to 
by the most successful producing companies 
in the country. 

Transportation facilities play an impor¬ 
tant part in the development of a property 
and the lack of them sometimes holds back a 
small company’s financial progress for an 
almost hopeless period. This has an im¬ 
portant bearing not only on the obtaining of 
equipment for drilling, but also on the mar¬ 
keting of the production, if oil be obtained. 

If the district is not tapped by a pipe line, 
nearness to a railroad is essential. The 
farther removed the property may be from 
existing pipe lines, the longer the delay and 
the larger the production that must be devel¬ 
oped before a pipe line company is willing 
to provide marketing facilities. A pipe line 
company is a decidedly business-like institu- 
207 


OIL—NEW MONARCH OF MOTION 


tion and must have fairly conclusive evidence 
that the project will prove profitable before 
it will extend its lines into new producing 
territory. 

An oil company that has production, but 
is unable to market it, is not an immediately 
profitable proposition. 

Another important factor—again referring 
to a new company—is whether the company’s 
financial resources are adequate to carry out 
the work that will be necessary before it 
becomes a self-sustaining, dividend-earning 
organization. 

If it is a company already past the forma¬ 
tion stage, its balance sheet and income ac¬ 
count should be consulted. The question of 
funded debt also is essential. 

If the company is just being launched, the 
investor should know something regarding 
the cost of the properties to the company; 
should estimate the amount of capital that 
will be placed in the company’s treasury 
through the sale of stock, and then should 
judge whether this will be sufficient, without 
further financing, to put the company “over 
the hump,” or on a paying basis. The pros¬ 
pective investor likewise should put himself 
208 


SELECTING OIL SECURITIES 


in a position to judge whether the company is 
overcapitalized. 

Quality of oil and ability to maintain 
production are other important factors. Qual¬ 
ity of oil is quite essential, as may be judged 
by the fact that on May 1, 1919, the price of 
the various grades of crude oil produced in 
the United States had a range of from 75 
cents to $4.00 a barrel. The 75-cent price 
prevailed for certain grades of heavy, as¬ 
phaltic oils produced in the Gulf Coast dis¬ 
trict. The $4.00 quotation was for Pennsyl¬ 
vania grade of crude. The same price was 
being received for oil from the Garber field of 
Oklahoma, for which there was being paid a 
premium of $1.75 over the posted price of 
$2.25 for Mid-Continent crude. 

These are merely a few suggestions given 
in an endeavor to show that the ordinary 
rules of business apply to the making of an 
investment in oil just as surely as they apply 
to any other form of investment. 

There is no question but that securities 
of bona fide oil companies form an immensely 
—and increasingly—profitable field of invest¬ 
ment, but facts rather than adjectives should 

influence the decision. 

209 


OIL—NEW MONARCH OF MOTION 


A high-class, established and reputable 
dealer in securities should be consulted be¬ 
fore (instead of after) buying. Such a secur¬ 
ities house gathers basic facts regarding many 
companies and it is a part of its service to 
customers and prospective customers to give 
out those facts in an unprejudiced manner. 
The selection of the broker should be carried 
out with the same judgment that is applied 
to the selection of banker, lawyer or physician. 
For it is from the reputable securities house 
that the essential facts governing the profits 
to be derived from an oil investment may be 
obtained. 

It is an immensely prosperous industry 
and the gate to this prosperity is open to the 
investor who reads correctly the signs that 
direct him to the gateway. 


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